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TMI Blog2023 (7) TMI 1265X X X X Extracts X X X X X X X X Extracts X X X X ..... age of fixed capital cost, is not a payment directly or indirectly made to meet any portion of the actual cost and, therefore, such subsidy was not to be reduced from the actual cost u/s 43(1) of the Act. This view was fortified by the decision of Eicher Tractors Ltd [ 2007 (5) TMI 688 - DELHI HIGH COURT] . We do not find any error or infirmity in the findings of the ld. CIT(A). Disallowance of deduction u/s 10B - allocation of expenses - AO has computed the profits of EOU units on pro-rata basis in the ratio of sales turnover of EOU units and non-EOU units - HELD THAT:- We find that the entire quarrel revolves around the payment of Senior Management Salary, which has been allocated by the Assessing Officer in the ratio of turnover of EOU and non-EOU units as against appellant s allocation of 5% of total expenses. In A.Y 2006 07, AO was not convinced with the allocation and in the year under consideration i.e A.Y 2007 08, the assessee itself has allocated the Senior Management Salary cost in the ratio of sales of EOU units and non-EOU units. Therefore, the adverse inference of the AO in A.Y 2006 07 has been taken care of in A.Y 2007 08. Thus no merit in the action of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f depreciation. 4. In so far as whether Sales Tax subsidy is of revenue in nature or is capital receipt, this issue travelled up to the Tribunal in the first round of litigation and the Tribunal in ITA No. 2831/DEL/07 and others have given a categorical finding that Sales Tax subsidy is of capital in nature, following the Special Bench decision in the case of Reliance Industries Ltd 88 ITD 273, which was subsequently affirmed by the Hon ble High Court of Bombay. 5. Respectfully following the decision of the Coordinate Bench, Sales Tax subsidy is treated as capital receipt. 6. This quarrel settled for A.Ys 2004-05, 2005 06 and 2006 07, but in A.Y 2007 08, the Assessing Officer recomputed the depreciation by reducing the capital subsidy from written down value of assets and made addition of Rs. 2,44,77, 836/ in A.Y 2007 08. 7. Taking a leaf out of the findings given in A.Y 2007 08, the same treatment was given in A.Ys 2004 05 to 2006 07. In all these 4 years, when the issue was agitated before the ld. CIT(A), the ld. CIT(A) held that the amount of Sales Tax subsidy could not be reduced from the block of assets for the purpose of computing depreciation. 8. While giving ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sproportionately higher than the profits of non-EOU units. The quarrel is only in respect of allocation of expenses. The Assessing Officer has computed the profits of EOU units on pro-rata basis in the ratio of sales turnover of EOU units and non-EOU units. 16. This action of the Assessing Officer was challenged before the ld. CIT(A) and it was strongly contended that the assessee is maintaining separate books of account for the DTA units and the EOU units which were audited every year and separate balance sheet and profit and loss account is prepared for EOU being also certified by auditors of the Company. 17. It was explained that the EOU unit is separately registered with Excise and Sales Tax department having separate factory building and separate production facilities. It was further pointed out that the Sales Tax return and Excise returns were filed for EOU units. Product mix of EOU and non-EOU units are different and these products are having different margin of profit and, therefore, allocation of profits of the company as a whole in the ratio of sales of EOU and non-EOU units is not justified. 18. After considering the facts and submissions, the ld. CIT(A) observe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relates to the deletion of addition on account of depreciation on computer accessories. 28. While scrutinizing the return of income, Assessing Officer noticed that the assessee has made addition to the computer and computer software on depreciation, @ of 60% was claimed. The Assessing Officer further noticed that the assessee has also claimed depreciation @ 60% on computer accessories and peripherals. The Assessing Officer was of the opinion that the assessee is entitled for depreciation @ 15% only and disallowed excess depreciation claimed. 29. Assessee agitated the matter before the ld. CIT(A), and strongly contended that computer accessories and peripherals are also eligible for the same rate of depreciation as that of Computer i.e @ 60%. 30. The ld. CIT(A) was of the opinion that the ratio laid down by the Hon ble Delhi High Court in the case of BSES Rajdhani Ltd, squarely apply wherein the Hon'ble High Court has held that peripherals, such as printers, scanners, server, formed, integral part of computer, and therefore, eligible for deduction of depreciation, @ 60%. 31. Before us, the ld. DR could not bring any distinguishing decision in favour of the revenue. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be treated as an asset or advantage for the enduring benefit of the business of the assessee. The nature of the expenditure incurred in raising a loan would depend upon the nature and purpose of the loan. A loan is a liability and has to be repaid and, in our opinion, it is erroneous to consider a liability as an asset or an advantage. A loan may be intended to be used for the purchase of raw-material when it is negotiated, but the company may after raising the loan change its mind and spend it on securing capital assets. Therefore, the purpose for which the new loan was required was irrelevant to the consideration of the question whether the expenditure for obtaining the loan was revenue expenditure or capital expenditure. Hence (a) the loan obtained is not an asset or advantage of an enduring nature; (b) that the expenditure was made for securing the use of money for a certain period-, and (c) that it is irrelevant to consider the object with which the loan was obtained. Consequently, in the circumstances of the case, the expenditure was revenue expenditure. 45. Respectfully following the decision of the Hon ble Supreme Court, [supra] we decline to interfere. Ground No. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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