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TMI Blog2009 (7) TMI 65X X X X Extracts X X X X X X X X Extracts X X X X ..... come liable for payment but had not actually made payment – therefore benefit can not be denied where payment has not been made - 422/2007 - - - Dated:- 27-7-2009 - VALMIKI MEHTA J. Ms. Rashmi Chopra, Advocate, for the appellant. Mr. C.S. Aggarwal, Sr. Advocate with Mr. Prakash Kumar, Mr. Sunil Kapoor, for the respondent. JUDGMENT VALMIKI J. MEHTA, J. - Three issues have been raised by the Revenue in this appeal under Section 260(A) of the Income Tax Act, 1961. The first issue is that the ITAT has erred in allowing depreciation on the flat purchased by the assessee at Mumbai. The second issue raised by the Revenue is that the ITAT has erred in allowing expenditure made by the assessee for the purchase of two machines in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the judgment of the Bombay High Court in the case of Dinesh Kumar Gulab Chand Aggarwal vs. Commissioner of Income Tax, 267 ITR 768. However, since there are judgments of two Division Benches of this Court in the case reported as CIT Vs. Refrigeration Allied Industries Ltd., 247 ITR 12 and Capital Bus Services vs. CIT, 123 ITR 404, we would be bound by the same. In the case of Refrigeration Allied Industries Ltd. it had been held by this Court that the expression "used for the purpose of business" includes passive user of the assets in the business. It was held that the asset cannot be said to be not used when the same is kept ready for use. This Court, therefore, in the said case allowed depreciation allowance to the assessee an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ebt incurred is an expenditure incurred within the meaning of the expression "expenditure is incurred" occurring in Section 35(2)(i)(a). The counsel for the assessee drew the attention of this Court to Section 43 Sub-Section 2 of the Act which defines the expression "paid" to means actually paid or incurred according to the method of accounting upon the basis of which profits or gains are computed. It is not disputed by the Revenue that the books of accounts are maintained by the assessee on mercantile basis. This is also the concurrent finding of the two authorities below. In the mercantile method of accounting incurring of the expenditure is not based on payment but on the liability to pay. Once the goods have been purchased, the invoices ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rea of more than 3 lakhs Sq. ft. with plant and machinery and that the assessee has given sufficient details of expenditure incurred. In fact, this work was surveyed as per the order of the Assessing Officer and the survey report did not find any defects details in the claim of the assessee. The Assessing Officer did not refer to this survey report in the assessment order and consequently a report was called by the CIT(A) from the Assessing Officer as to why no mention was made about the survey report in the assessment order. The explanation of the Assessing Officer was that the survey report was received on fax on 31.3.2000 and since it was illegible the same was not referred to. This explanation of the Assessing Officer is indifferent to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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