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TMI Blog2020 (10) TMI 1324X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Coordinate Benches from AY 1994-to 1999-00 uphold the order of CIT(A) on this issue by dismissing the ground raised by the assessee. Addition u/s 40A(9) of the Act in respect of contribution to Utmal Employees Welfare Fund - HELD THAT:- We find that the issue is squarely coved in favour of the assessee by the decision of the Coordinate Bench of the Tribunal in assessee s own case for the A.Y 1994-95 to 1997-98 and 1999-2000 - Since the facts are materially same, therefore, we are inclined to set aside the order of CIT(A) on this issue and direct the A.O to allow the deduction towards contribution to Utmal Employees Welfare Fund. Accordingly the ground No. 2 raised by the assessee is allowed. Disallowance on account of expenditure incurred in relation to oil exploration u/s 42 - CIT(A) confirmed the order of the Assessing Officer by holding that the word used denotes actual usage and not merely ready for use and as the actual usage happened in the next assessment year, deduction under section 42 of the Act would not be allowable in the current assessment year and would be allowed in the following assessment year - HELD THAT:- After hearing both the parties and perusing the la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce Utilities and Power Ltd.. while [ 2009 (1) TMI 4 - BOMBAY HIGH COURT ] considering Section 36(1)(iii) of the Act would apply while considering the application of Section 14A - Decided in favour of assessee. Addition on account of gain on extinguishment of sales tax deferred loan liability - Capital or revenue receipt - HELD THAT:- The assignment has not been accepted by the Sales-tax Department and, therefore, there is no question of cessation or remission of the liability.Besides the deemed loan from the Sales-tax Department is not a loss or expenditure or a trading liability and, therefore, the provision of section 41(1) of the Act is not applicable. The sales-tax originally collected by the assessee was an expenditure which has been allowed to the assessee by treating it as a deemed loan. Once the said amount has been treated as a loan, it loses its characteristic of sale-tax liability. Such deemed loan is not a loss or expenditure or a trading liability and, hence, does not come within the ambit of section 41(1) of the Act. In the present case the pre-payment of a deferred sales-tax loan liability at the net present value, does not result in any benefit to the assessee. Besi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in ground no. 7 supra/. Moreover the issue is also covered by the decision of the coordinate bench in AY 19999-00 - Similarly the issue of profits derived from DG sets not allowed as reduction from book profit u/s 80-IA is covered in favour of the assessee by the same decision of the coordinate bench in AY 1999-00 -Therefore the adjustments on account of disallowance under section 14A and profits derived from DG sets not allowed as reduction from book profit u/s 80-IA are allowed in favor of the assessee. The third adjustment on account of disallowance of Deduction of tax paid u/s 115-O while computing book profit is covered against the assessee by the order of the coordinate bench for AY 1999-00 - Accordingly the issue is decided against the assessee. The ground is partly allowed. Claim of deduction in computing book profit under section 115JA of the Act under section 80HHC based on book profit and not tax profit - HELD THAT:- We find that the issue is arising out of the records before the authorities below and does not require any verification of facts or details. We are therefore admitting the same and restoring to the file of the AO to examine and decide as per facts and law. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the circumstances of the case and in law, the Ld. CIT(A) erred in confirming the disallowance of claim for deduction of expenditure incurred in relation to oil exploration u/s 42 of the Act. 4. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in confirming disallowance of certain expenditure incurred on SAP R/3 software & Hyperion Pillar Software by treating the same as capital expenditure. 5. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in confirming the disallowance of certain amount of interest expenditure u/s 14A of the Act by holding that the same is attributable to investments made in tax free bonds, shares and units of mutual funds. 6. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in confirming the addition made on account of gain on extinguishment of sales tax deferred loan liability by treating it as revenue receipt. 7. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in upholding the computation of deduction u/s 80HHC on the following basis: a. Total Turnover was reckoned inclusive of unclaimed credit balance and scrap s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ground that assessee has failed to furnish the evidences corroborating that the said expenditure was incurred for the purpose of business wholly and exclusively or out of the business and commercial consideration and therefore cannot be allowed u/s 37 of the Act. 4. Ld. CIT(A) confirmed the disallowance made by the AO by relying upon the decision of his predecessor in AY 1999-2000 and also the decision of Coordinate bench from A.Y 1990-91 to 1994-95. 5. After hearing both the parties and perusing the material available on record, we observe that in this case the Coordinate Bench in assessee's own case in A.Y 1988-89 has decided the issue in favour of the assessee in ITA No. 2423/Mum/1992 vide order dated 27.07.2004 whereas, the issue has been decided against the assessee in all subsequent years commencing from AY 1994-95 to 1999-00. Since all the assessment years right from AY 1994-95 to 199900 the issue is decided against the assessee, we, therefore, respectfully following the decisions of the Coordinate Benches from AY 1994-to 1999-00 uphold the order of CIT(A) on this issue by dismissing the ground raised by the assessee. 6. The issue raised in Ground No. 2 is against the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this issue. 12. Ld. AR submitted that the order of ld. CIT(A) confirming the addition is against the spirit of the Act as contained in the provisions of section 42 of the Act. The ld. AR submits that section 42(1)(b) of the Act provides for allowance in relation to expenditure incurred by the assessee, whether before or after such commercial production in respect of drilling or exploration activities or services or in respect of physical assets used in that connection except the asset on which depreciation was available. The ld AR, therefore, submitted that the expenditure is allowable when two conditions are satisfied namely (i) expenditure is incurred by the assessee in respect of physical assets; and (ii) such assets are used in drilling or exploration activities. The issue, which arises for consideration, is that where the expenditure is incurred in the current year but the assets were used in a subsequent year, then whether the deduction is to be allowed in the year of incurrence of expenditure or in the year in which the assets were used for the purpose of business of the assessee. The ld AR submitted that a correct interpretation of section 42(1)(b) of the Act is that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich is used in business of the assessee. In the present case the assessee incurred Rs. 54,72,697/- on acquisition of asset which was used for the purpose of business in the assessment year 2001-02. The Ld. CIT(A) has opined that the term 'used' in the language of the section denotes actual usage and not ready to use, which in our opinion is correct. In this case, we observed that the section does specify the use of the said assets which has to be the year in which the asset is used for the purpose of business. Accordingly, we inclined to uphold the order ld. CIT(A) on this issue by dismissing the ground no. 3 raised by the assessee. Needless to say that this deduction is to be allowed in the year in which the asset is put to use i.e AY 2001-02. Accordingly the Ground No. 3 is dismissed. 15. The issue raised in ground No. 4 is against the confirmation of Rs. 2,33,90,856/- by CIT(A) as made by the AO towards obtaining a license to use SAP-R/3 software and its implementation in the organization by treating the same as capital expenditure. 16. Briefly facts of the case are that the assessee incurred expenditure of Rs. 2,33,90,856/-towards obtaining a license to use SAP-R/3 software a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding operations or enabling management to conduct assessee's business more efficiently or more profitably but it was not in nature of profit-making apparatus, software expenditure was allowable as revenue expenditure. In CIT v. Amway India Enterprises (2012) 346 ITR 341 (Delhi), it has been held that the purchase of software is a revenue expenditure. In CIT v. Asahi India Safety Glass Ltd. (2012) 346 ITR 329(Delhi), it is held that the extent of expenditure cannot be a decisive factor in determining its nature and treatment in books of account not conclusive. The Hon'ble High Court held that the software expenses were not to create new asset or a new source of income but to upgrade the system and thus the software expenditure is revenue expenditure. Facts being identical, we follow the ratio laid down in the above decisions and hold that the expenditure incurred by the assessee on computer software is revenue in nature. Thus the 7thand 8th grounds of appeal are allowed. 19. Since, the facts before us are materially same, therefore, we are inclined to set aside the order of CIT(A) on this issue by following the coordinate bench decision and direct the AO to allow this expendi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that for the first time in the case of HDFC Bank Ltd. (supra) that this Court took a view that the presumption which has been laid down in Reliance Utilities & Power Ltd. (supra) with regard to investment in tax free securities coming out of assessee's own funds in case the same are in excess of the investments made in the securities (notwithstanding the fact that the assessee concerned may also have taken some funds on interest) applies, when applying Section 14A of the Act. Thus, the decision of this Court in HDFC Bank Ltd. (supra) for the first time on 23rd July, 2014 has settled the issue by holding that the test of presumption as held by this Court in Reliance Utilities and Power Ltd. (supra) while considering Section 36(1)(iii) of the Act would apply while considering the application of Section 14A of the Act. The aforesaid decision of this Court in HDFC Bank Ltd. (supra) on the above issue has also been accepted by the Revenue in as much as even though they have filed an appeal to the Supreme Court against that order on the other issue therein viz. broken period interest, no appeal has been preferred by the Revenue on the issue of invoking the principles laid down in Rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the transferee and, therefore, the sum of Rs.51.60 Crores is taxable as income of the assessee. 26. In the appellate proceedings, the ld. Commissioner of Income-tax (Appeals) confirmed the addition made by the Assessing Officer, not under section 41(1) as made by the AO, but by holding that the said transaction resulted in a benefit to the assessee which is taxable under section 28(iv) of the Act. The ld. CIT(A) referring to the decision of CIT vs. Sunderam Iyengar (supra) and relying on the decision of the jurisdictional High Court in Solid Containers Ltd. vs. DCIT, 308 ITR 417,(Bom) held that the loan received by an assessee, which is ultimately retained in the business upon waiver of the loan, is taxable as receipt of the benefit by the appellant under section 28(iv) of the Act. Accordingly, the benefit arising to the Appellant is taxable as revenue receipt. 27. The ld senior counsel of the appellant submitted the order passed by the first appellate authority on this issue in incorrect as it has gone a step further than what AO has done. The ld AR argued that although the addition was originally made by the Assessing Officer by referring to and relying upon the provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with respect to assignment of deferred loan liability at net present value has also been considered by the Hon'ble Tribunal in the case of Cable Corporation of India Ltd. vs. Deputy Commissioner of Income-(Supra) wherein on identical facts, the Tribunal has held that the assignment of such liability, at the net present value, cannot be charged to tax either under section 41(1) of the Act or under section 28(iv) of the Act. It was argued that in the present case, the provisions of section 41(1) of the Act are also not applicable, as there is no remission or cessation of the liability. The remission or cessation of liability contemplates a discharge or partial discharge of a liability coupled with no obligation to discharge the balance liability and thus, it would not cover the facts of the present case, where the assessee has assigned its obligation, although at the present value. The ld AR argued that that when liability has been discharged by the assessee by making an immediate payment at the present value, it cannot be said that there is a remission or cessation of the liability. The payment of a properly calculated smaller sum at an earlier point of time (discounted amount) cann ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onvertible into money or not', which means that cash benefits are not covered by the said section. This issue has been decided in favour of the Appellant by the decision of the Apex Court in the case of CIT vs. Mahindra & Mahindra Ltd.93 taxmann.com 32(SC) wherein the Apex Court has held that waiver of loan is a monetary benefit and, hence, it does not come within the ambit of section 28(iv) of the Act. Therefore, the ld. AR submitted that the provisions of section 28(iv) of the Act are inapplicable to the facts of the present case and, hence, the amount of Rs.51,60,87,976/- is to be regarded as capital receipt not chargeable to tax. The ld AR finally submitted that as already argued and submitted that the Tribunal in the case of Cable Corporation of India Ltd. vs. Deputy Commissioner of Income-tax(Supra) on identical facts has concluded that the assignment of such liability, at the net present value cannot be charged to tax under section 28(iv) of the Act. Therefore ld. AR prayed before the bench that appeal of the assessee on this issue may kindly be allowed by reversing the orders of lower authorities. 31. The Departmental Representative, on the other hand, relied on the orders ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n glass bottles of, etc. which are refundable on return of the said bottles. During the relevant year, such deposits outstanding for a number of years were transferred by the assessee to the Profit & Loss Account as no longer payable to the said customers. On these facts, the Apex Court held that the amount was received by the assessee in the course of trading transaction and the same is chargeable to tax as trading receipts when the said amount becomes the assessee's own money. The Apex Court further held that because of the trading transaction, the assessee has become richer to the extent of the amount transferred to Profit & Loss Account and, hence, the amount so transferred is to be treated as income of the assessee. The ld AR submitted that the facts in thepresent case are distinguishable and, therefore, the decision of the Apex Court is not applicable as the Supreme Court was neither concerned with section 28(iv) or section 41(1) of the Act, but with the issue of whether the amount received by an assessee in the course of a trading transaction, should be treated as income of the assessee or not. In the present case, the allegation of the Assessing Officer and the Commissioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt dated 24th April 2018 in Mahindra & Mahindra Ltd.(supra).Therefore, the reliance on the decision of the Madras High Court by the Revenue is wholly misplaced and completely unjustified. 34. The ld AR submitted that the facts in the case of CIT Vs. Aries Advertising Pvt. Ltd.(supra) are altogether different as the facts in the present case. In the case before the High Court, there was actual write off of credit balances (trading liabilities) and, accordingly, the High Court held that the assessee therein had received a benefit in respect of a trading liability which came within the ambit of section 41(1) of the Act. As submitted aforesaid, in the present case of the assessee, there is no question of any benefit being received by the assessee as the appellant has discharged the net present value of a future liability nor can the present case be said to be of remission or cession of the liability. Therefore, this decision is clearly inapplicable to the facts of the present case. 35. In the case of CIT vs. ICC India Pvt. Ltd. (supra), the Hon'ble High Court has held that share application amount was a capital receipt and was never received towards trading purpose and, therefore, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ipt. Therefore, the Appellant submits that the said decision is clearly inapplicable on the facts of the present case. Even otherwise, the Appellant submits that the decision of the Tribunal being contrary to the decisions in Balkrishna Industries Ltd. (supra) and Mahindra &Mahindra Ltd. (supra), is not applicable to the Appellant. 37. After hearing both the parties and perusing the material available on record, the undisputed facts coming out are that the sales tax was collected by the assessee from the customers under Sales Tax deferral Incentive Scheme. As per the said scheme the payment of said sale tax was to be deferred for specified number of years subject to the fulfillment of certain special conditions as specified in the scheme. Such deferment of sale tax was to be treated as loan to the assessee by sales tax department to be paid after a specified number of years. During the year the assessee deferred the sales tax amounting to Rs. 71.34 crores which the assessee has assigned to another company at a net present value of Rs. 19.73 crores. In other words, the assessee has paid an amount of Rs. 19.73 crores in assignment in consideration for taking over the said obligation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ishna Industries Ltd. 88 taxmann.com 273 (SC) wherein the Supreme Court has affirmed the decision of the Hon'ble Bombay High Court in the case of CIT vs. Sulzer India Ltd., 369 ITR 717(Bom) holding that when an assessee discharges the present value of future obligation, it would not be a case of any 'benefit' accruing to the assessee, as the assessee has discharged the full liability at the present value. Therefore, as there is no 'benefit' obtained by or accruing to the assessee, the question of applicability of section 41(1) of the Act does not arise. In both the Supreme Court and the High Court decisions were concerned with pre-payment of salestax liability at net present value to the Sales-tax Department, but the same principle would equally be applicable to the present case of assignment of the sales-tax deferred loan liability at the net present value.We find merits in the case of the assessee that the provisions of section 41(1) of the Act are not applicable, as there is no remission or cessation of the liability. The remission or cessation of liability contemplates a discharge or partial discharge of a liability coupled with no obligation to discharge the balance liability ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ra) wherein on identical facts, the Tribunal has concluded that the assignment of such liability, at the net present value, cannot be charged to tax either under section 41(1) of the Act or under section 28(iv) of the Act.The provisions of section 28(iv) of the Act are not applicable to the facts of the present case as monetary benefit is not covered by the said section. Section 28(iv) of the Act uses the phrase - 'whether convertible into money or not', which would mean that cash benefits are not covered by the said section. This issue is covered in favour of the assessee by the decision of the Apex Court in the case of CIT vs. Mahindra & Mahindra Ltd.93 taxmann.com 32(SC) wherein the Apex Court has held that waiver of loan is a monetary benefit and, hence, it does not come within the ambit of section 28(iv) of the Act. Therefore, the amount of Rs.51,60,87,976/- is to be regarded as capital receipt which is not chargeable to tax. 39. We have also perused the decision relied upon by the revenue to support the orders of the authorities below but find that the same are distinguishable on facts or reversed or not a good law in view of the subsequent decisions.In the case of CIT vs. S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dra Ltd. (supra) and, therefore, the said decision is no longer good law. The finding by the High Court that the provision of section 28(iv) of the Act is applicable to a waiver of loan is contrary to the decision of Mahindra & Mahindra Ltd. (supra) wherein the Apex Court has held that waiver of loan being a monetary benefit is not covered under section 28(iv) of the Act. Even for applicability of section 41(1) of the Act, the Apex Court has held that waiver of loan amounts to cessation of a liability other than a trading liability, for which no deduction has been claimed in earlier years and, therefore, does not come within the ambit of section 41(1) of the Act. Thus the decision of the Bombay High Court in Solid Containers Ltd.(supra) which had taken a contrary view, is no longer good law. Further the decision of Solid Containers Ltd.(supra) is further not applicable to the present case as in the present case, the Appellant has discharged the full liability at net present value which cannot be said to be a case of either waiver or cessation of the liability, which was the fact before the High Court. The decision in the case of CIT vs. Ramaniyam Homes Pvt. Ltd.,(supra) relied upon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... over its obligation, which amount is lesser than the amount payable to the Sales-tax Department. The facts in this case are different is further clear from the reliance by the Tribunal on decision of Sun & Sand Hotels Pvt. Ltd. vs. DCIT (ITA No.7125/MUM/2007) wherein also it was a case of transfer of sales-tax entitlement for a consideration which was held as revenue receipt. Therefore, the Appellant submits that the said decision is clearly inapplicable on the facts of the present case. Even otherwise, the Appellant submits that the decision of the Tribunal being contrary to the decisions in Balkrishna Industries Ltd. (supra) and Mahindra & Mahindra Ltd. (supra), is not applicable to the Appellant. In view of these facts and decisions as discussed above we are inclined to set aside the order of CIT(A) on this issue by holding that Rs. 51.61 Crores is a capital in nature. The AO is directed accordingly. The ground of the assessee is allowed. 40. The issue raised in 7th ground of appeal is against the order of CIT(A) upholding the computation of deduction u/s 80HHC as made by the AO by rejecting the manner of computation by the assessee. 41. The facts in brief are that the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rit in the contentions of the appellant, he stated that the AO was justified in applying explanation (baa) and in also following the decision in the case of K.K. Doshi 245 ITR 849 (Bom). Action of the AO was therefore, upheld. e) As regards restriction in respect deduction allowed u/s 80HHB reduced from the profits of the Business while calculating deduction u/s. 80HHC, since the appellant has failed to offer any satisfactory reply contrary to the decision of the AO, no interference was called for and the said ground was dismissed. 43. After hearing both the sides and perusing the materials on records including the decisions of the coordinate benches in assessee's own case, we find that the issue is squarely covered by the followings decisions as under: Ground Assessment Year Page and Para No reference to case law paper book Concluded in favour of Inclusion of Excise Duty, Scrap Sales, sales tax & Unclaimed Credit Balances in the Total Turnover. A.Y. 1998- 99 AY 1997-98 A.Y. 1995-96 to A.Y. 1996-97 A.Y. 1994-95 AY 1999-00 Page 52/Para 5 Page 63-64 / Para 7-a and Page 69 / Para 22 Page 83/ Para 31 Page 92/Para 69 Page 123-124/Para 57-58 Pages 2528 / Paras 11 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act is to be computed at the rate at which the electricity is supplied to the consumers and not the rate at which the board purchases the electricity. The Appellant further submits that similar view has been taken by the Chhattisgarh High Court in the cases of Godavari Power &Ispat Ltd., 42 taxmann.com 551 and the madras High Court in Tamil Nadu Petrol Products Ltd., 13 taxmann.com 139. Therefore, the Appellant submits that the decision of the lower authority is liable to be reversed on this issue.The Appellant submits that the Department has relied on the decision in the case of CIT vs. ITC Ltd., 286 ITR 400 (Cal) to hold that the working done by the Assessing Officer is the correct working for computing deduction under section 80IA of the Act. The Appellant submits that the decision of the Calcutta High Court has been considered by the jurisdictional High Court in the case of Reliance Industries Ltd. (supra) and has not been followed by the jurisdictional High Court and, therefore, in the present case, the Tribunal is bound to follow a decision of the jurisdictional High Court and not another High Court. Hence, the Appellant submits that the decision of the Calcutta High ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the findings of AO and concluded that there was no reason to deviate from the findings of AO. Also ld. CIT(A) relied on the order by his predecessor wherein he had rejected similar claim of the appellant in respect of Captive Power Generating (DG) unit for AY 1999-2000. 52. After hearing the counsel of the assessee and departmental representative of the revenue and perusing the facts of the assessee case in the light of coordinate bench decision in AY 1999-00 in assessee's own case , we observe that the issue before us is completely covered by the said decision vide para 12.2 in favour of the assessee. We are ,therefore , inclined to set aside the order of CIT(A) on this issue by allowing the ground no.9. The AO is directed accordingly. 53. The assessee has challenged vide ground no.10 the order of CIT(A) wherein the ld. CIT(A) has confirmed the adjustments/additions for the purpose of computing book profit u/s 115JA of the Act as made by the /AO on account of (i) Disallowance u/s 14A(ii) Reduction of deduction u/s 80IA relating to profits of power generation operation from captive power plants (iii) Disallowance u/s 80-IA relating to profits of power generation operation throu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... these adjustments by the AO by observing and holding as under:- "a) Disallowance u/s 14A :The appellant has relied on the arguments put forth in connection with the addition made u/s 14A of the Act. The action of the AO in ground no.17 has already been affirmed. As such, there is no scope for interference in the matter in view of specific provision for making such adjustment in section 115JA with regard to exempted income. The addition made is upheld. b) On the profits derived from DG sets not allowed as reduction from book profit u/s 80-IA and reduction of deduction u/s 80 IA relating to profits of power generation operation from captive power plants, the ld. CIT(A) held that since appellant has relied on the arguments put forth in earlier ground on this matter and the action of AO has already been confirmed as such, there is no scope for interference in the matter in view of the provision for making such adjustment in section 115JA. Similar claim of appellant had not be entertained for AY 1999-2000 on identical facts of the case, following the same, the addition made was upheld. c) On the Disallowance of Deduction of tax paid u/s 115-O ld. CIT(A) held that, the appellant it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -2000] and there being no change in the facts of the present case, the said additional ground must also be admitted in the present case. On the other hand the ld. DR opposed the admission of additional ground as the assessee has failed to raise the said issue before the authorities below. 59. The Appellant submits that submission of the Revenue that no justification has been given for raising the additional ground for the first time before the Tribunal and not raising the same before lower authorities is irrelevant as the Apex Court has held that as long as the ground arises from the appeal filed by the Tribunal and it does not require investigation of any new facts, the Tribunal ought to admit the additional ground filed by the assessee. In the present case, as facts are already on record, the Tribunal ought to admit the additional ground filed by the Appellant. Without prejudice, and in any case, the Appellant submits that the additional ground has been raised on account of the decision of the Apex Court in the case of CIT vs. Bahari Information Technology Systems Pvt. Ltd.340 ITR 593 which decision was not available at the time of filing the return of income. Therefore, the App ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore directing the AO accept the depreciation as calculated by the assessee. The additional ground is allowed. 66. In the result the appeal of the assessee is partly allowed. ITA No.3573/Mum/2012 - Department's appeal AY 2000-01 67. Ground No. 1 of the appeal is general ground and require no specific adjudication. 68. The issue raised in ground no. 2 is against the order of CIT(A) challenging the deletion of addition as made by the AO by disallowing the expenditure claimed by the assessee on setting up of new plant as revenue by holding the same to be of capital in nature. 69. The facts in brief are that the assessee has incurred Rs. 6,05,26,344/- as expenditure on setting up of new cement plants details of which are as follows: Cement Plant: Sr. No Location Title Amount Rs. 1 Arakkonam AGU 1,63,14,549 2 Cochin Cement Terminal CCT 4,81,478 TOTAL 1,67,96,027 Captive Power Projects: Sr. No Location State Title Amount Rs. 1 Kovaya Gujarat GCW -CPP 4,37,30,317 TOTAL 4,37,30,317 According to the assessee these expenses were basically revenue in nature and have been incurred wholly and exclusively for the purpose of the company's business. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd capitalized therefrom by apportionment to related assets. However, as the new cement plants being set up forming part of the existing business carried by appellant, the impugned interest was claimed as deductible in computing the total income. Consequently no depreciation was claimed on interest capitalized in books of accounts of the assessee. The assessee also made without prejudice claim for depreciation in the event pre-operative expenditure are not allowed as a deduction. The AO has relied on order by his predecessor in earlier year and disallowed the abovementioned expenditure by treating it as capital in nature however allowed the assessee's without prejudice claim for depreciation on those plants which have commenced production. 74. In appellate proceedings, the ld. CIT(A) observed that similar claim has been allowed by CIT(A) in AY 1999-2000 and does not find any reason to deviate from the decision of the predecessor and thus deleted the addition made by AO. 75. After perusing the records before us and hearing the rival contentions , we find that issue is settled in favour of the assessee by the decisions of the coordinate benches in assessee own case right from AY 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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