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TMI Blog2017 (9) TMI 1872X X X X Extracts X X X X X X X X Extracts X X X X ..... d capital gains from sale of plot of land at Mulund - applicability of provisions of section 50 - HELD THAT:- Following the judgment of the Hon'ble Bombay High Court in the case of Heatex Products [ 2016 (7) TMI 1393 - BOMBAY HIGH COURT] the Tribunal decided the issue in favour of the assessee held provisions of Section 50C would apply only to capital assets being land or building or both and it could not be applied to transfer of lease hold rights in land. Not referring the matter to the DVO for determining the market value of the assets - we hold that the FAA had not interpreted the provisions of section 50(2) of the Act correctly, that the AO should have referred that matter to the DVO. FMV of the land as on 01.04.1982 - A perusal of the Indian Valuers Directory and Reference Book (Pg. 340 of the PB) reveal that the market value of land located in the adjoining areas of Mulund on 01.04.1981 was ₹ 400-480/- per Sq. feet. Tribunal, in the case of Kumar K Chabaria [ 2010 (2) TMI 1252 - ITAT, MUMBAI] has considered the said Reference Book as a reliable source for valuation of capital assets. So, in our opinion, FMV adopted by the assessee as on 01.04.1981 cann ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... G of the Act to the assessee. Sale of right of the plot of land - As per the assessee the AO had erroneously reduced the area of assets sold by it. It was also argued that there was a mistake in determining the proportionate cost of improvement calculation - HELD THAT:- AR argued that the AO and FAA erroneously reduced the area of assets sold, that there was error in calculation of proportionate cost of improvement, that it had sold development rights in land and not the land itself, that the area to be considered had to be measured in terms of FSI and not area of land, that the AO should have considered FSI potential of 7.08 lakhs sq. ft. for computing the cost in the hands of the assessee, that in the development agreement it had mentioned that saleable land was 6.38 lakhs sq.ft., that the FAA had reduced the cost of acquisition and cost of improvement - both these facts needs further verification on part of the AO. So, in the interest of justice we direct the AO to decide both the issue afresh. He is directed to consider all the facts and figures produced by it, before us, during the appellate proceedings. Both the grounds stand partly allowed. Ad hoc disallowance of va ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 005-06 - HELD THAT:- only objection of the AO is that the provisions refer to new machinery or plant and therefore the machinery will cease to be a new machinery after the end of the first year in which it is installed or put to use. In our view this stand taken by the revenue is not supported by the language of statutory provision. The condition imposed by the relevant provisions is that Plant and Machinery must be new at the time of installation to be eligible for additional depreciation u/s. 32(1)(iia) and not new in subsequent years. The expression new machinery is therefore to be construed as referring to the condition that at the time of acquisition or installation the machinery or plant should be new. Going by the legislative history of the relevant provision, we are of the view that the condition for allowing additional depreciation only in the initial assessment year ceased to exist as and from 01.04.2006. The plain language of the section warrants such an interpretation. - Decided against revenue Not allowing foreign exchange fluctuation loss incurred by assessee in respect of currency swap and derivative transactions - HELD THAT:- During the year under consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #8377; 6,57,91,246/-, as incentive/subsidy in the form of sales tax exemption, that it had claimed that subsidy was capital receipt, that it had relied upon the cases of Balrampur Chini Mills Ltd. (238 ITR 445) and Reliance Industries Ltd. (88 ITD 273, Mumbai Special Bench), that it had claimed that the notional sales tax liability for setting up the unit at Lakampur in district Nashik was in the nature of capital receipt, that it was granted to encourage investment in the backward areas of the State of Maharashtra. The AO observed that the sales tax exemption were applicable right from the A.Y. 1995-96, that the assessee had got eligibility certificate is also certificate of entitlement way back in 1996, that it had not claimed any deduction on notional sales tax exemption as capital receipt for the A.Ys. 1995-96 to 2003-04, that filing of a revised return on the last day for the year under consideration was only an indication of afterthought on part of the assessee to claim sales tax exemption as capital subsidy, that any capital subsidy granted by the government would be granted as one-time transaction, that it could not be the nature of recurring incentive, that the very nature ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... almost 8 years showed that nature of the exemption was not clear even to the assessee, that it was advised in represented by professionals, that the scheme and the certificate granted to the assessee proved that it had got sales tax incentive by way of interest-free unsecured loan, that it had to repay the sales tax liability after 10 years as per the repayment schedule, that there was no mention in the scheme to the effect that the amounts retained by it had to be utilised towards acquisition of any fixed capital, that the perusal of the 1993 scheme revealed that earlier scheme of 1988 was fully revised, that the reliance of the assessee on the decision of the Tribunal in the case of RIL was not correct, that the said decision deliberated upon the earlier scheme and not the one under which the assessee had been granted sales tax exemption, that the assessee received the sales tax incentive on a totally different scheme than the one deliberated upon by the Tribunal. Finally, the FAA held that the nature of subsidy in the case under consideration was not of capital nature, that there was nothing under the scheme to indicate that sales tax exemption was in the nature of capital subs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal in the case of RIL and the scheme of 1993 applicable for the year under appeal. He would afford a reasonable opportunity of hearing to the assessee. First Ground of appeal is decided in favour of the assessee, in part. 3. Next effective Ground of appeal (GOA. 2-5) is about income under the head capital gains from sale of plot of land at Mulund. During the assessment proceedings, the AO found that the assessee had sold industrial land pertaining to the Mulund factory, that in the return of income it had claimed Long-Term Capital Loss (LTCL) from sale of plot of land, that it had claimed deduction u/s. 54 of the Act, that in the return of income it had taken value of sale consideration at ₹ 64.92 crores as per the registered agreement of sale of the plot of land, that on the sale deed document the franked value of stamp duty was mentioned at ₹ 80.78 lakhs, that the details obtained from the office of the registrar indicated that market value of the plot of land was ₹ 80.78 crores, that the sale document also indicated payment of stamp duty at the rate of 10% (₹ 80,78,150/-). Referring to the provisions of section 50 of the Act, he stated that it had dea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and in question was acquired much before 01/04/1981, that the assessee exercised the option of FMV as on that date for the cost of acquisition of land, that the land was valued at the rate of ₹ 60.40 per square feet (₹ 650/- per sq.mtr.) as on 01/04/1981, that the assessee had filed the valuation report along with the return of income, that the valuation was done by a registered valuer who had inspected the site on 04/02/1991, that in the assessment proceedings the then AO had taken the rate at the ₹ 575/- per sq. mtr. instead of ₹ 650/- per sq. mtr. as claimed by the assessee, that in the appellate proceedings the then FAA had directed the AO to get the property valued from the DVO for the purpose of FMV of the land as on 01/04/1998 and then finalised the assessment. Accordingly, the matter was referred to the DVO who determined the value of the land, as on 01/04/1981, at the rate of ₹ 590/- per sq. mtr. (₹ 54.83 per sq. ft.). As per the AO the assessee, vide its letter dated 07/03/2003, during the proceedings of the computation had consented to adopt the value as reported by the DVO on the reference made by the Department, that for the purpose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had sold the land in the FY. 2003-04 as a residential land after converting the industrial land, that in the process of conversion it had incurred expenses in nature of compensation to the workers and expenses for obtaining TDR, that the cost of improvement had been separately claimed by it while computing the capital gains, that the amount of such expenses were in the range of ₹ 15-₹ 16 crores, that if the value of the said amount is on 01/04/1981 was calculated backwards the FMV as on 01/04/1981 would be much lower than what had been reported by the DVO, that the rate of ₹ 200 per sq.ft. has FMV of land could not be accepted, that the principle of estoppel is applicable as the assessee was all along taking the rate of land is on 01/04/1981. ₹ 60.40 per sq.ft. for the A.Ys. 1995-96 till 2001-02, that suddenly for the year under consideration the FMV rate of the land as on 01/04/1981 was taken at ₹ 200 per sq. ft., that the rate adopted by the DVO i.e. ₹ 54.83 per sq. ft. as on 01/04/1981 adopted till the AY 2001-02 was not contested by the assessee, that it could not be allowed to take the FMV of the land at ₹ 200/- per sq. ft. on the bas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld not be allowed the benefit of same deduction again in the year under consideration, that to avail the benefit of the provisions of section 54 time period was of material importance. About the area of land sold, the FAA held that the assessee had contended that area of land should be taken at ₹ 7.08 lakhs sq. ft. instead of ₹ 6.38 lakhs sq. ft., that the AO had deliberated upon the figures appearing in the sale agreement entered into by the assessee, that the argument raised by the assessee had to be dismissed. With regard to the brought forward capital losses, the FAA directed the AO to verify the figures and pass necessary orders. 3.2 Before us, the AR argued that during the year under consideration, the assessee had transferred the development rights in respect of its industrial land situated at Mulund to Nirmal Lifestyles (NL) in terms of the development agreement dated 24/02/2004, that in terms of the said agreement gross sale consideration agreed between both the parties amounted to ₹ 64.92 crores, that accordingly the said sum was considered as full value of the sale consideration for the purpose of computing capital gains on sale of development rights ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .s, that the assessee had obtained registered valuer's report as on 01/04/1981 pertaining to industrial land, that the assessee had contested the valuation done by DVO for the earlier AY.s, that valuation report had been set aside by the Tribunal for the AY. 1995-96, that the valuation done by the DVO since 1995-96 would not survive any longer, that there was no question of Estoppel in any event, that for computing FMV of the property it had submitted a valuation report from two independent valuers, that the valuer had computed FMV of the assets as on 1/4/1981 based on four well accepted scientific methods which provided a range of values between 200-240 per sq.ft., that on a conservative basis FMV was finalised at ₹ 200 per sq.ft. as a fair approximation of the probable value of land. He referred to India Valuer's Directory and Reference Book and stated that the industrial land was situated in 'T' ward of Municipal Corporation of Greater Mumbai, that land was situated between LBS Marg on West and Central Railways Line on the East, that in Indian Valuers Directory market value of the adjoining areas had been decided to ₹ 440-480 per sq.ft. as on 1/4/1981 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f ₹ 41,47,204/- made by AO on account of transfer of lease hold rights in the property u/s. 50C of the IT Act. 3. Rival contentions have been heard and record perused. 4. Facts in brief are that the assessee acquired lease hold rights from Lavasa Corporation Ltd. It was contention of assessee that property rights were acquired on lease basis and the lease amount for the same was to be paid in installments. Since assessee on account of financial difficulties could not make the payment of lease as per the schedule, the lease hold rights were assigned to M/s. Deepak Textiles for consideration of ₹ 28,59,395/-. The AO held that assessee has transferred rights in an immovable property, accordingly he invoked the provisions of Section 50C and made an addition of ₹ 41,47,204/-. 5. By the impugned order, CIT(A) deleted the addition after following the order of the ITAT-Mumbai Bench in case of Atul G Puranik vs. ITO (132 (1) ITD 499) and Kolkata Bench of ITAT in case of Tejinder Singh (19 Taxmann.com 4). 6. On the other hand, learned AR placed on record order of the ITAT Mumbai Bench in case of Shavo Norgren (P) Ltd., -33 Taxmann.com 491 in support of the propo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idence of filing an appeal from the order of the Tribunal in Atul G. Puranik (supra) is produced. The fact situation in both Atul G. Puranik (supra) and this case is identical as no distinction in facts of the present case from those arising in Atul Puranik (supra) has been pointed out. 6. In above view the question as framed does not give any rise to any substantial question of law and thus not entertained. 10. Respectfully following the proposition of law laid down by Hon'ble Bombay High Court, we do not find any infirmity in the order of CIT(A) for deleting addition by holding that Section 50C is not applicable in case of lease hold rights. 3.3.2 Now, we would take up the issues of not referring the matter to the DVO for determining the market value of the assets. Perusal of pages 122-23 reveal that vide its letter dtd. 18.01.2006, the assessee had disputed the value adopted by the stamp duty authorities. In our opinion, once objections are raised, by an assessee, about the valuation, the AO has no option-he had to refer the matter to the valuation cell. But, in the case under appeal the AO completed the assessment without making a reference. We hold that the AO h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n set aside by the Tribunal and thus it does not survive. A perusal of the Indian Valuers Directory and Reference Book (Pg. 340 of the PB) reveal that the market value of land located in the adjoining areas of Mulund on 01.04.1981 was ₹ 400-480/- per Sq. feet. Tribunal, in the case of Kumar K Chabaria (ITA/5347/Mum/2008, has considered the said Reference Book as a reliable source for valuation of capital assets. So, in our opinion, FMV adopted by the assessee as on 01.04.1981 cannot be brushed aside-rather it is quite reasonable. As far as reference to the DVO u/s. 55A of the Act is concerned, we would like to say that after the judgments of the Hon'ble Bombay High Court in the cases of Daulal Mohta (360 ITR 680) and Pooja Prints (360 ITR 697) there is no doubt that the AO cannot make a reference to the DVO for purpose of valuation, where the value of the property, declared by the assessee, is not less than FMV. In other words reference u/s. 55A of the Act can only be made in cases where the value of capital asset shown by an assessee is less than the FMV of the land. In the case under consideration, the value shown the assessee is more than the FMV and therefore there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dertaking, that the computation of income for the A.Ys. 2000-01 and 2001-02 indicated that the assessee had sold part of residential land during the previous year relevant to those A.Ys. also, that there was no mention of any claim u/s. 54 for the said A.Ys. in the notes submitted with the computation of income. Finally, he held that claim made by the assessee for deduction u/s. 54G was not admissible for the year under consideration. 4.1 After considering the submission of the assessee and the assessment order, the FAA held that the section 54G had to be read as a whole, that the phrase 'in consequence of' related to the period of 3 years after the date of transfer of the capital asset referred to in the provisions of section 54G(1) of the Act, that the assessee had already claimed and had also been allowed the benefit of special deduction u/s. 54G in the earlier years, that it could not be allowed the same deduction again. Finally, she upheld the order of the AO. 4.2 Before us, the AR argued that the assessee had fully satisfied all condition for claiming deduction u/s. 54G, that undertaking was shifted from urban area to non-urban area i.e. from Mulund to Lakhampur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Hon'ble Minister of Finance, while introducing the Finance Act, 1987 stated as under: 83. Concentration of industries in many of our urban areas poses serious problems of congestion, pollution and hazards. In order to encourage industries to shift out of such areas, I propose to exempt capital gains made on the sale of land and buildings in such areas provided these are reinvested in approved relocation schemes. Notes on clause for the Finance Bill, 1987 reads as under: The new section 54G provides for exemption of capital gains on transfer of assets in cases of industrial undertaking shifting from urban area. Sub-section (1) provides that if an assessee transfers a long-term capital asset in the nature of machinery, plant, building or land used for the purposes of the business of the industrial under taking situated in an urban area in connection with the shifting of such undertaking to a non-urban area, and within a period of one year before or three years after the date of transfer, purchases new machinery or plant and acquires land or building or constructs building for the purposes of his business in the area to which the under taking is shifted or incurs exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l required by the Board and to substitute the repealed provision with the new scheme contained in section 54G of the Act. 4.3.2 The opening portion of section 54G reads as follow: Subject to the provisions of sub-section (2), where the capital gain arises from the transfer of a capital asset........ In our opinion, the most important and decisive factor for claiming the deduction, arising of capital gain, is transfer of capital asset. In other words, capital gains and transfer of specified assets should have a direct and live link. Shifting of undertaking is also important, but the tax incidence will come into picture only after assets are transferred. The purpose behind the section is to decongest the urban areas and to shift the industries from the cities. In that sense it is a welfare legislation. As per the settled principles of taxation benevolent provisions of Act should always be interpreted liberally. The intention behind the section is clear that assessee should invest the sale proceeds of sale of specified assets in industrialisation or should deposit the same in a designated bank account. The assessee, in the case under consideration, had entered in to an ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5.2 In our opinion, both these facts needs further verification on part of the AO. So, in the interest of justice we direct the AO to decide both the issue afresh. He is directed to consider all the facts and figures produced by it, before us, during the appellate proceedings. Both the grounds stand partly allowed. 6. Next effective Ground of appeal (GOA. 13-16) is about ad hoc disallowance of various expenses. During assessment proceedings, the AO had made disallowance under various heads namely electricity expenses (7.20 lakhs); sales promotion expense (₹ 4 lakhs); repairs and maintenance (25 lakhs); and legal and professional charges (10 lakhs). 6.1 During the appellate proceedings, the FAA remanded back the issue of electricity expenses to the file of AO. With regard to other disallowances, he held that the same were only meager disallowances in comparison to quantum of expenses. In short, all ad hoc disallowance, made by the AO, were confirmed by the FAA. 6.2 Before us, the AR stated that the Tribunal while deciding the appeal for A.Y. 2003-04 (ITA/814/Mum/2007) had decide identical issue and set aside the issue of disallowance made for electricity expenses t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The assessee has filed the above appeal against the order of the AO passed u/s. 143(3) r.w.s. 250 of the Act. During the course of hearing before us, the AR did not press GOA 1-5. Hence, same stand dismissed. GOA 6 is consequential in nature, so, we are not adjudicating it. ITA/1366/Mum/2009,2005-06: 8.Grounds No. 2, 3, 5 and 6 were not pressed by the AR of the assessee, so, we dismiss the same as not pressed. 9. Ground No. 1 is about sales tax incentive scheme. Following our order for earlier AY. (paragraph 2.3 of the order), we restore back the issue to the file of the AO and allow the ground partly. 10. Ad-hoc disallowance of ₹ 61.26 lakhs is the subject matter of Ground four. During the assessment proceedings, the AO found that the assessee had claimed sales promotion expenses incurred under a scheme namely Shubh Utsav under which stockiest were provided foreign trips as reward, that Kyoni Travels were paid the disputed sum. He disallowed ₹ 6 lakhs on ad-hoc basis holding that the expenses claimed under the scheme were not laid out wholly and exclusively for the purpose of business. 10.1 In the appellate proceedings, the FAA confirmed the disallowanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ised before him with regard to provision for leave encashment. As per the Hon'ble Bombay High Court additional claim can be raised before the appellate authorities (349 ITR 336-Pruthvi Brokers and Shareholders Private Ltd.). Therefore, we are of the opinion matter should be restored back to the file of the FAA for fresh adjudication, who would decide the issue after affording a reasonable opportunity of hearing to the assessee and after considering the cases relied upon before us. Fifth ground of appeal is allowed in favour of the assessee, in part. ITA/1971/Mum/2013, A.Y. 2007-08: 12. First ground of appeal deals with deduction in respect of provision for leave encashment, amounting ₹ 1.69 crores. During the assessment proceedings the AO found that the assessee had debited ₹ 1,69,22,101/- towards provision for leave encashment in P L account. However, the AO disallowed the claim of the assessee on the Ground that the it had made the claim in view of the decision of the Excide Industries Ltd. (292 ITR 470), that the Hon'ble Supreme Court had provisionally stayed order of Calcutta High Court in the case of Excide Industries. In the appellate proceedings the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... certain conditions, that by the Finance Act, 2005, section 32(1)(iia) has been amended, that the additional depreciation was allowable only in respect of any New P M and the Machinery Plant acquired in earlier year could be said to be a new Plant machinery in the subsequent years,. He referred to the Explanatory note to Finance Act 2005, (Circular No. 3 dt. 27/2/2006) and held that additional depreciation would be admissible only at the time of investment in new P M and not in any of the subsequent years. Finally he upheld the order of the AO. 13.2 Before us the AR referred to the case of Gloster Jute Mills Ltd. (ITA/95/Kol/2011, dated 01/03/2017) and argued that as per the amended provisions of section 32(1) the restriction previously imposed of allowing additional depreciation only in the year of installation of machinery had ceased to exist as an from 01/04/2006, that additional depreciation was available even in the subsequent assessment years, that the expression new machinery had to be construed as referring to the condition at the time of acquisition or installation and not in the subsequent years. The DR argued that the assessee had claimed depreciation on the plant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ailed of additional depreciation @ 20% on the original cost of the machinery at ₹ 5,95,494/- and ₹ 48,26,123/- respectively in AY 2006-07. In AY 2007-08 also the Assessee claimed additional depreciation at 20% of the original cost viz., ₹ 5,95,494 and ₹ 48,26,123 respectively in all depreciation totaling ₹ 54,21,617/-. 26. According to the AO, the deduction u/s. 32(1)(iia) of the Act is granted only to new plant and machinery and once depreciation is granted in the 1st year in which the machinery is installed or put to use, the machinery ceases to be a new machinery and therefore additional depreciation cannot be allowed. The plea of the Assessee however was that Section 32(1)(iia) of the Act merely provides that further to the normal depreciation at the prescribed rates, an additional depreciation shall be allowed to the assessee at the rate of 20% on new plant and machinery acquired and installed after 31.03.2005. However, the period the period during which such additional depreciation shall be allowed is not specified in the Act. Thus, one may conclude that the allowance of additional depreciation shall not only be restricted to the initial yea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ows: (iia) in the case of any new machinery or plant (other than ships and aircraft), which has been acquired and installed after the 31st day of March, 2005, by an assessee engaged in the business of manufacture or production of any article or thing, a further sum equal to twenty per cent of the actual cost of such machinery or plant shall be allowed as deduction under clause(ii): 29. It can be seen from the provisions of Sec. 32(1)(iia) as it existed from 1.4.1981 to 31.3.1988 and reinserted subsequently from 1.4.2003 that the benefit for claiming additional depreciation was restricted only to the initial assessment year. However the provisions of Sec. 32(1)(iia) as substituted by the finance Act, 2005 w.e.f. 1-4-2006, the benefit for claiming additional depreciation was not so restricted to only to the initial assessment year. From AY 1981-82 to 87-88, the claim for additional depreciation was restricted to previous year in which such machinery or plant is installed or, if the machinery or plant is first put to use in the immediately succeeding previous year. From AY 2003-04 till 2005-06, the claim for additional depreciation was restricted to previous year in which su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, 2005 wherein it has been clarified that in order to encourage investment the provisions of sec. 32(1)(iia) have been amended. In so far as the language used in the provision in concerned one has to construe the language beneficially and in favour of the assessee as held by the Jurisdictional High Court in the case of Indian Jute Mill Association in 134 ITR 68. There is little merit in the contention of the AO that the asset is not new in the second year. In my view for claiming additional depreciation the assessee has to acquire and install the plant machinery after 31-03-2005 and the same should be new in the year of installation. There is no requirement that the assets should be new in the year of claim of additional depreciation. For the reasons aforesaid I am of the view that in terms of provisions of Section 32(1)(iia), additional depreciation is available in AY 2006-07 and subsequent years in respect of all new plant machinery acquired and installed after 31-03-2005 subject to overall criteria that total depreciation does not exceed the actual cost. Hence Ground No. 4 is decided in favour of the Appellant. 31. Aggrieved by the order of CIT(A) the revenue has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the time of installation to be eligible for additional depreciation u/s. 32(1)(iia) and not new in subsequent years. 32. We have given very careful consideration to the rival submissions and are of the view that the provision of section 32(1)(iia) as amended w.e.f. 01.04.2006 by the Finance Act 2005, there is no restriction that the additional depreciation will be allowed only in one year or that it would be allowed only on the written down value. The law as it prevailed prior to the said amendment imposed such a condition that additional depreciation will be allowed only in the year of installation of machinery or plant or the year in which it is first put to use or the year in which the concerned undertaking begins to manufacture or produce any article or thing or achieves substantial expansion by way of increase in installed capacity by 25%. The only objection of the AO is that the provisions refer to new machinery or plant and therefore the machinery will cease to be a new machinery after the end of the first year in which it is installed or put to use. In our view this stand taken by the revenue is not supported by the language of statutory provision. The condition im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee, for earlier years, we have restored back the issue of sales tax incentive to the file of FAA for fresh adjudication. Following the same we direct him to decide the issue afresh. Effective Ground of appeal is allowed in his favour, in part. ITA/1972/Mum/2013, A.Y. 2008-09 16. First Ground of appeal, filed by assessee, is about provision for leave encashment debited to P L account amounting to ₹ 67.98 lakhs. Following our order for the earlier year, we decide the first ground against the assessee. 17. Second Ground deals with additional depreciation u/s. 32(1)(iia) amounting to ₹ 7.14 crores in respect of eligible P M acquired and installed during AY. 2005-06 and 2006-07. Following our order for earlier year, (Paragraph 13 of the order), we allow the ground raised by the assessee. 18. Last Ground of appeal is about not allowing foreign exchange fluctuation loss of ₹ 4.93 crores, incurred by assessee in respect of currency swap and derivative transactions. The assessee had claimed notional loss, before the AO as detailed below: He observed that as per final Term Sheet issued by ICICI Bank in respect of Libor Hedge it was noticed that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n exchange loss of ₹ 350.18 lakhs, that it was net of foreign exchange gain, that the loss mainly comprised of swap loss of ₹ 493.50 lakhs, that the assessee was consistently booking loss or gain on Foreign exchange on the basis of the foreign exchange rate as on the last date of particular year. In the subsequent year i.e. AY 2011-12 when the assessee had shown surplus the AO had taxed the same. In our opinion the AO should follow uniform policy for taxing or not taxing the foreign exchange loss/gains. If gains are to be taxed of a particular transaction the losses arising out of same cannot be denied to the assessee. The AO/FAA has not commented upon the fact that assessee was following AS-11. Considering the above, we are of the opinion that FAA was not justified in confirming the order of the AO. Ground No. 3 is decided in favour of the assessee. ITA/1886/Mum/2013, A.Y. 2008-09 19. Effective Ground of appeal (GOA 1-4), raised by the AO is about deleting an amount of ₹ 5.37 crores, being disallowance of claim of sales tax incentive. Following our order for the earlier year (Para-15), we direct the AO to decide the issue afresh. Effective Ground of appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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