AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2010 (11) TMI 953
X X X X Extracts X X X X
X X X X Extracts X X X X
....4,79,82,217/- in respect of expenditure incurred in earlier years on capital work-in-progress that had been capitalized during the year in case it is ultimately held that the appellant is entitled to deduction for scientific research expenditure in the year of capitalization." 4. The Ld. CIT(A) erred in not directing the Additional Commissioner to allow deduction for the expenditure of Rs. 9,16,30,000/- being premium paid on leasehold land, as revenue expenditure" 5. The Ld. CIT(A) erred in not directing the Additional Commissioner to allow deduction for the expenditure of Rs. 2,29,98,000/- being expenditure on right of way as revenue expenditure" 6. Without prejudice to the above, the Ld. CIT(A) ought to have directed to allow proportionate deduction for expenditure incurred during the year and during the earlier years on leasehold land and right of way." 7. The Ld. CIT(A) ought to have specifically directed to allow deduction of Rs. 5,70,91,700/- u/s. 80IB in respect of AU-V Gujarat refinery." 8. The Ld. CIT(A) erred in not specifically directing the Additional Commissioner to allow deduction u/s. 80IB of Rs. 68,71,26,000/- in respect ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....und Nos. 1,7,8 & 9. 5. Ground Nos. 10 to 16 raised by the assessee read as follows: "10.The Ld. CIT(A) erred in confirming the action of the Asstt. Commissioner in disallowing the appellant's claim for deduction of the amount of Rs. 3,94,01,265/- u/s. 80HHC in respect of the following exports: (a) Export of ATF to foreign airlines (b) Export of petroleum products produced in the refinery like naptha, furnace oil, benzene, etc. "11. The Ld. CIT(A) ought to have held that the appellant was entitled to the entire amount of deduction u/s. 80HHC as claimed by the appellant, subject only to variation based on the amount of profits assessed under the head "profits and gains of business or profession". 12. The Ld. CIT(A) erred in holding that a sale of ATF to foreign airlines is not of the nature of exports. The Ld. CIT(A) ought to have appreciated the fact that the ATF was in fact exported out of India and payment thereof had been received in convertible foreign exchange. Hence as per the provisions of Sec. 80HHC, the appellant is entitled for deduction in respect of such exports. 13. The Ld. CIT(A) erred in holding that the p....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Power and Fuel (LDO) issued to Coke Calcination Unit (CCU) at barauni refinery 81,37,219 4. Fixed water charges levied by Gujarat Government 7,32,42,513 5. Licence fee demand received from department of Telecom, Bhuj 9,14,41,637 6. Hire charges 30,99,438 7. Expenses pertaining to security force at Tikrikalan Bottle Plant 30,60,000 8. Error in posting purchase of AFFF type 3% foam concentrate (Chemical & additive, item code -6516151014) 6,71,670 9. Survey expenses 2,22,60,225 10. Error in reconciliation and adjustment of Crude Oil Loan 32,24,31,000 11. Depreciation of AOD 65,77,000 8. Without prejudice to the above, the Ld. CIT(A) erred in holding that the Ld. Additional Commissioner has in the assessment order disallowed the net prior period expenditure after netting off the prior period income. The Ld. CIT(A) ought to have directed the Ld. Additional Commissioner to set off canalizing commission pertaining to earlier years of Rs. 1624 lacs against the prior period expenses." 19. Without prejudice to the above, the Ld. CIT(A) ought to have directed the Additional Commissioner to all....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ded on estimate basis and may result into, under provisioning or over provisioning in some cases. It is claimed that such difference in estimates have been classified as "prior period expenses" in the accounts. It is submitted that the actual liability in the cases have crystallized during the year and though the provision was made in the earlier year, such a provision was subject to variation and that these differences were claimed as expenditure during the year. It is further argued that Accounting Standard -2 notified u/s. 145 by the Central Board of Direct Taxes pertains to "disclosure of prior period and extraordinary items and changes in accounting policies". He submitted that this accounting standard specifically states that a change in estimate does not constitute correction of an error and that a change in estimate does not constitute correction of an error and that a change in estimate shall not be treated as prior period items. Thus he argues that the expenditure in question has to be allowed on the ground that it has crystallized during the year. Reliance was placed on the following judgements: 1. Saurashtra Cements & Chemicals Industries Ltd. Vs CIT 213 ITR 52....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tor on 4.3.1983. It was held that market fee is deductible in the assessment year 1983-84 by observing that this part of the statutory liability, in this case, admittedly accrued in the year in question and has became real and enforceable in the year in question, though the same is referable to the earlier assessment years. So the test laid down by the Court is that the year of allowability is when the said liability has become real and enforceable. The Hon'ble Gujarat High Court in the case of Saurashtra Cement & Chemical Industries Vs CIT 213 ITR 523 (Guj) held as follows: "Merely because an expenses relates to a transaction of an earlier year it does not become a liability payable in the earlier year unless it can be said that the liability was determined and crystallized in the year in question on the basis of maintaining accounts on the mercantile basis. It is to be found in respect of any claim, whether such liability was crystallized and quantified during the previous year so as to be required to be adjusted in the books of that previous year." It further observed as follows: "If any liability, though relating to the earlier year, depends upon making a demand and....