TaxTMI 
TaxTMI 
2008 (2) TMI 108
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....preciation from the assessment year 1994-1995, arrived at a net taxable income of Rs.Nil. The assessee inter alia claimed deduction of expenditure incurred on issue of debentures and collection of fixed deposits as revenue expenditure. The Assessing Officer disallowed the same, as also the depreciation on standby machinery. Aggrieved by the assessment orders, the assessee filed appeals before the Commissioner of Income Tax (Appeals), who allowed the same based on the orders passed for the earlier years on the same issues. The Revenue took the matter on further appeal to the Income Tax Appellate Tribunal. The Income Tax Appellate Tribunal confirmed the orders of the Commissioner of Income Tax (Appeals). Hence, the present appeal has been fil....
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.... linked with the business requirement of the assessee, it is apposite to have a cursory look on the decided case-laws on this point. In India Cements Ltd. v. C.I.T. [1966] 60 ITR 52 (SC), while deciding the nature of the amount spent towards stamps, registration fees, lawyer's fees, etc., for obtaining loan, the Supreme Court observed as follows (page 63): "A loan may be intended to be used for the purchase of raw material when it is negotiated, but the company may, after raising the loan, change its mind and spend it on securing capital assets. Is the purpose at the time the loan is negotiated to be taken into consideration or the purpose for which it is actually used? ..... the purpose for which the ....
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....35D of the Act which deals with amortisation of certain preliminary expenses, and the Bombay High Court held that (page 698): "Section 35D deals with amortisation of certain preliminary expenses. Under section 35D(1)(ii), it is laid down that after the commencement of the business any expenditure as described in section 35D(2), which is incurred in connection with the extension of the industrial undertaking or with regard to setting up a new industrial unit then the assessee shall be allowed a deduction at an amount equal to one-tenth of such expenditure for each of the ten successive previous years beginning with the previous year in which the business commences or the previous year in which expansion of the indu....
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....Tribunal was right in holding that the expenses for obtaining fixed deposits from the public is revenue in nature. Accordingly, we answer the second question in the affirmative and against the Revenue. ...." 7. In respect of the second question of law, whether the standby assets are eligible for depreciation, the Division Bench of this Court in the case of COMMISSIONER OF INCOME-TAX VS. SOUTHERN PETROCHEMICAL INDUSTRIES CORPORATION LIMITED reported in [2007] 292 ITR 362, after referring the judgment of the Supreme Court in the case of LIQLUIDATORS OF PURSA LIMITED VS. CIT reported in [1954] 25 ITR 265, judgments of Bombay High Court in the case of COMMISSIONER OF INCOME-TAX VS. VISWANATH BHASKAR SATHE reported in [1937] 5 ITR....