Actual cost for depreciation may include subsequently paid duty, and a respondent may support the order without cross-objection.

Customs duty paid after conversion of an export-oriented unit into a domestic tariff area unit was treated as attributable to the plant and machinery cost, so the payment was held to be capital in nature for the asset-cost computation and the assessee's alternative claim was accepted. On that basis, depreciation was allowed on the actual cost of the plant and machinery including the subsequently paid duty, applying the statutory definition of actual cost. The Tribunal also correctly applied Rule 27, permitting the respondent to support the appellate order on a ground decided against it without filing a cross-objection. No substantial question of law survived.

---

---

Issues: (i) Whether customs duty paid on imported plant and machinery, after conversion of the unit from export-oriented status to domestic tariff area status, was capital expenditure or revenue expenditure; (ii) whether depreciation was admissible on the actual cost of plant and machinery including the customs duty paid subsequently; (iii) whether the assessee could support the order of the first appellate authority on a ground decided against it without filing a cross-objection.

Issue (i): Whether customs duty paid on imported plant and machinery, after conversion of the unit from export-oriented status to domestic tariff area status, was capital expenditure or revenue expenditure.

Analysis: The duty was paid in connection with debonding and conversion of the unit, and the amount was added to the cost of fixed assets. The Tribunal treated the payment as having been incurred wholly and exclusively for business purposes and allowed the alternative claim as revenue expenditure.

Conclusion: The issue was decided in favour of the assessee and against the Revenue.

Issue (ii): Whether depreciation was admissible on the actual cost of plant and machinery including the customs duty paid subsequently.

Analysis: The governing principle is that actual cost for depreciation has to be determined under the statutory definition, and subsequent payment affecting the cost of the asset is to be taken into account. The judgment relied on the Supreme Court's view that the actual cost determination is not confined to assets acquired in a particular year and that the cost component includes the duty element in the facts of the case.

Conclusion: The issue was decided in favour of the assessee and against the Revenue.

Issue (iii): Whether the assessee could support the order of the first appellate authority on a ground decided against it without filing a cross-objection.

Analysis: Rule 27 permits the respondent to support the order appealed against on any ground decided against it, even without filing a cross-appeal or cross-objection. On that basis, the Tribunal was justified in entertaining the assessee's supporting contention.

Conclusion: The issue was decided against the Revenue and in favour of the assessee.

Final Conclusion: No substantial question of law survived in favour of the Revenue, and the appellate challenge failed.

Ratio Decidendi: For depreciation, actual cost is to be determined according to the statutory definition and may include subsequently paid duty attributable to the asset, and a respondent may support the impugned order on grounds decided against it under Rule 27 without a cross-objection.

---