TaxTMI 
TaxTMI 
2015 (6) TMI 39
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....ere formulated at the time of admission of the appeal:- "I. Whether, on the facts and circumstances of the case, the Income Tax Appellate Tribunal has erred in allowing expenditure of Rs. 46,26,552/- on development of machineries as revenue expenditure though the machineries developed were neither used for the business of the assessee nor sold? II. Whether, on the facts and circumstances of the case, the Income Tax Appellate Tribunal has erred in failing to adjudicate upon the question of allowance of provision of Rs. 21,70,93,280/- for advertisement under the erroneous impression that it was covered by the remand report submitted by the Assessing Officer? III. Whether, on the facts and circumstances of the case, the Income Tax App....
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.... user of spare parts in the regular business activities of the assessee is also the user of the machineries for the business activities of the assessee did not furnish any details to show what are the spare parts used in the possible way in the business of the assessee, what is the value of such spare parts and what is the actual amount of infructuous capital assets." In an appeal preferred by the assessee, the CIT (Appeals) was, however, of the opinion that the expenses were allowable under section 37. The following reasons were advanced. "Therefore, the project was abandoned and the cost of such abandoned project was an allowable revenue expense as per decision of the B. Nagireddy v. CIT reported in 194 ITR 451. The sale of spare pa....
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....hat the matter has already been delayed. So far as the third question is concerned, Mr. Agarwal, learned advocate for the appellant/revenue submitted that the expenditure should be added to the cost of acquisition of the capital assets under section 43A. He in support of his submission relied on Explanation 3 to section 43A which reads as follows:- "Explanation 3.- Where the assessee has entered into a contract with an authorised dealer as defined in section 2 of the Foreign Exchange Management Act, 1999 (42 of 1999), for providing him with a specified sum in a foreign currency on or after a stipulated future date at the rate of exchange specified in the contract to enable him to meet the whole or any part of the liability aforesaid, ....
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....es not touch the point as regards the fee payable or the consideration payable to an authorized dealer under Section 2 of the Foreign Exchange Regulation Act, 1947 which was the provision as it stood at the relevant time. The entire section 43A has undergone a change with effect from 1st April, 2003. It is not in dispute that the factual background is as follows, as would appear from the impugned judgement:- "The CIT has disallowed a sum of Rs. 1,78,08,000/- being bank charges paid by the assessee company in connection with repayment of a loan of US $ 10 million. The assessee company took a foreign currency loan of US$ 10 million in the year 1995. The loan was utilized for incurring capital expenditure for acquisition of plant and ....
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....es claimed by the assessee are not relatable to the fixed assets. Bank charges are payable in consideration of the risk undertaken by the bank. Therefore, it is in the nature of a fee for the guarantee provided by the banker which was considered by Andhra Pradesh High Court. What had happened before Andhra Pradesh High Court is as follows. The assessee, in that case imported machinery from two concerns in Japan on deferred payment basis. The deferred payments were guaranteed by banks and insurance companies. The assessee agreed to pay guarantee commission to the guarantors and claimed it as a business expenditure which was disallowed on the ground that the expenditure was of a capital nature. The Andhra Pradesh High Court held as follows....