2017 (6) TMI 87

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....inst the judgment and order dated 6.1.2006 passed by the Income Tax Appellate Tribunal in Appeal No. 4020/DEL/2001. On 11.5.2017 after formulating the three substantial questions of law in this appeal the judgment was reserved. The substantial questions of law are as follows:- "(1) Whether the custom duty paid on the purchase of plant and machinery would be a capital or a revenue expenditure? (2) Whether the depreciation on the purchase of plant and machinery is admissible on the actual cost of the plant and machinery excluding the custom duty, which was paid subsequent? and (3) Whether the Income Tax Appellate Tribunal was justified in returning a finding on the question of deduction permissible on account of ....

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....enditure as it has been incurred wholly and exclusively for the purpose of business. Since Income Tax Appellate Tribunal has accepted the plea of assessee that the amount of Rs. 8,19,44,049/- can be treated as revenue expenditure, as it has been incurred wholly and exclusively for the purpose of business, as the above mentioned amount was paid as excise duty, as assessee has converted its unit from 100% EOU under EPCG Scheme to DTA Unit and would sell goods in domestic market so this amount was paid for the more profitable business and finding of the tribunal in this regard treating the above amount as revenue expenditure in the alternate cannot be found faulty. Consequently, the first substantial question of law is answered in favour of as....

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.... in the previous year and moreover, in appeal the representative of the department conceded that the judgment of the Hon'ble Supreme Court in Saharanpur Electric Supply Co. Ltd. (Supra) was directly on this issue and was in favour of the assessee. So depreciation will be computed on the cost of plant and machinery and in its cost custom duty will also be added. In this regard the reasoning and the finding given by the tribunal is in accordance with law laid down by Hon'ble Apex Court in Saharanpur Electric Supply Co. Ltd. (Supra). Consequently, the substantial question of no. 2 is answered in favour assessee and against the department. The substantial question of law no. 3: Whether the Income Tax Appellate Tribunal was justifi....