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TMI Blog1987 (2) TMI 94X X X X Extracts X X X X X X X X Extracts X X X X ..... the customs authorities amounting to Rs. 20,000 could not be treated as actual cost of machinery and as such depreciation and investment allowance was not admissible on the same. 2. The facts relating to the amount of Rs. 20,000 are mentioned in para 5.1 of the assessment order. Shri N.K. Sud, in brief, submitted that certain machinery was imported for which the letter of credit had been taken ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt at p. 636 of ITR in the case of CIT vs. Loke Nath Co. (1984) 40 CTR (Del) 297 : (1984) 147 ITR 625 (Del). Next he pointed out that the assessee's case is different from the cases decided about infraction of law where a penalty is paid and is claimed as revenue expenditure. He stated that in this case the assessee's claim is to capitalise the amount of penalty as part of "Actual Cost" of the m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry of Chaturvedi Pithisaria on Income-tax, 3rd Edn., CIT vs. Pannalal Narottamdas Co. (1968) 67 ITR 667 (Bom), CIT vs. Polychem Ltd. (1975) 98 ITR 574 (Bom) and Supreme Court authority in the case of Challapalli Sugars Ltd. vs. CIT 1974 CTR (SC) 309 : (1975) 98 ITR 167 (SC). 3. On behalf of the Revenue, reliance was placed on the arguments mentioned by the ITO in the assessment order. In br ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (SC) 309 : (1975) 98 ITR 167 (SC), and has held that expression 'actual cost' should be understood in accordance with the normal rules of accountancy prevailing in commerce and industry. On that basis, the Supreme Court laid down that cost of fixed assets is to include all expenditure necessary to bring such assets into existence and to put them in working condition. Applying that test laid down ..... X X X X Extracts X X X X X X X X Extracts X X X X
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