TaxTMI 
TaxTMI 
2014 (2) TMI 234
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....ssessment was framed under section 143(3) vide order dated 29.09.2006 and the total loss was determined at Rs. 48,00,406/-. Aggrieved by the order of Assessing Officer, Assessee carried the matter before CIT(A). CIT(A) vide order dated 22.09.2010 granted partial relief to the Assessee. Aggrieved by the aforesaid order of CIT(A) the Assessee is now in appeal before us and has raised the following effective grounds:- 1. The learned Commissioner of Income Tax (Appeals) erred in fact and in law in confirming the action of the Assessing Officer in disallowing an amount of Rs. 1,02,300/- being amortization of expenses. 2. The learned Commissioner of Income Tax (Appeals) erred in fact and in law in confirming the action of the Assessing Officer in disallowing an amount of Rs.10,71,565/- considering the same as capital expenditure. It may be mentioned that the above expenses were incurred on preliminary survey for Aqua and Agro Project and not for new business. The said project was not undertaken and therefore the appellant had claimed the said expenses in the year under consideration. Without prejudice to the above the learne....
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....of Assessing Officer by holding as under:- 5.3 I have carefully considered the facts of the case, the submissions of the appellant and the assessment order. It is undisputed that the expenditure was incurred on preliminary survey and other technical matters in connection with a new project. It is also an admitted fact that the expenditure was for a new project not shown to be directly connection to the business affairs of the appellant. In the case of CIT vs. Maneklal Industries, 107 ITR 133 (Guj), it is held that expenditure incurred on getting expert opinion for setting up a factory is not an allowable deduction. Further in the case of Triveni Engineering Works v CIT 232 ITR, 639 (Del) it is held that the amount spent on project report is a capital expenditure. The decision in the case. of CIT v Jyoti Ltd,- 255 ITR 345 (Guj) cited by the Ld, AR is distinguishable on facts as in that case the expenditure on technical report was shown to have been incurred for expansion of business while in the current case no such intention is apparent from records. In the case of DCIT v Assam Asbestos 263 ITR 357 (Gau) relied upon by Ld AR the expenditure also was incurred in line....
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....s admittedly an expansion of the existing project. The proposed new project is stated to have inextricable linkage with the existing business of the assessee. It is also a fact that no new asset has come to be created by the incurring of expenses. Before us, the Revenue could not bring any material on record to controvert the submission of the assessee. 11. In the case of CIT Vs. Priya Village Roadshows Limited (supra) the Hon. High court relying on the decision in the case of Triveni Engineering Works Limited vs. CIT (1998) 232 ITR 639 (Del.) and in the case of CIT Vs. Modi Industries (1993) 200 ITR 341 (Del.) has held as under:- 10 "A harmonious reading of the aforesaid two judgments of this court namely Triveni Engineering Work Limted (supra) on the one hand and Modi Industries (supra) on the other would clearly demonstrate that one has to keep in mind. the essential purpose for which such an expenditure is incurred. If the expenditure is incurred for starting new business which was carried out by the assessee earlier, then such expenditure is held to be of capital nature. In that event it would be irrelevant as to whether project really materialized or not. H....
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.... assessee. He thus worked out excess claim of depreciation of Rs. 8,91,018/- and added to the income. Aggrieved by the order of Assessing Officer, Assessee carried the matter before CIT(A). CIT(A) after considering the submissions of the Assessee upheld the order of Assessing Officer by holding as under: 7.3.1 From above exposition it is apparent that the Greenhouses are in the nature of building which features as walls doors, frames gutters, roof, etc,, as in normal building even if it is expected that light or humidity are controlled in a Greenhouse, the features are also available in the smart buildings of today. Further the appellant has not been able to show as to what are the specialized machineries used for ternperature/light/humidity control. If there are such separate machineries they would be eligible for depreciation at higher depreciation but the structure per se would be eligible for depreciation at 10%. The decision cited by the appellant are distinguishable on facts as in the case of Venkateshwara Farms the Hon. ITAT has relied on the report of the technical expert to hold that the potter farm are in the nature of plant. Similarly in the decision in t....
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.... 259 ITR 661 (Kerala). 17. The learned D.R. on the other hand relied on the order of Assessing Officer and CIT(A). 18. We have heard the rival submissions and perused the material on record. It is an undisputed fact that the Assessee is engaged in the business of Tissue Culture activities. Before us, it has been stated that the green house are not used as shelter but green house performs a manufacturing process (hardening) and it is an integral part of the manufacturing process. It has been further stated that after the tissues of the plants attains specified growth in the laboratory first they are shifted to primary green house and then to secondary green house for hardening process. It is further stated that the green houses are developed with special technology by technically qualified person so as to adhere to the exact requirement of hardening process. Only after the hardening process is complete, the hardened and developed plants are put in the market for sale. It is further stated that the hardening process increases the value of product in the same way as manufacturing process and this hardening process is done by green houses. CIT(A) in his order at para 7.3 has expl....
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.... buildings, furniture and fittings, machinery and plant and ships. Machinery and plant include cinematograph films Page No: 0532 and other films and other items and 'building' is further given a meaning to include roads, bridges, culverts, wells and tube wells. Fora building used as a hotel, there is a specific provision in section 32(1)(v) for granting additional depreciation allowance at specified rates depending upon fulfillment of the conditions mentioned therein. In the context of the legislative scheme under section 32, even though the word 'plant' may include building or structure in certain set of circumstances as per the dictionary meaning, to say that a building used for running the business of hotel or a cinema would be 'plant' under the Act would be inconsistent with the provisions of section 32 and the legislative intent." The Supreme Court further held as follows (headnote) : "There is well-established distinction, in general terms, between the premises in which the business is carried on and the plant with which the business is carried on. The premises are not plant. It is proper to consider the function....