TaxTMI 
TaxTMI 
2019 (4) TMI 1285
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....ited within the due date of filing return? 2. Whether the Ld. CIT(A) was correct in deleting the disallowance on expenditure of Repairs & Maintenance to the Plant & Machinery to the extent of Rs. 1,16,13,324/- for which no bills and vouchers were produced u/s.37(1)of the Act? 3. Whether the Ld. CIT(A) was correct in deleting the disallowance on additional depreciation claimed by the assessee to the extent of Rs. 42,17,995/- without going to the fact that the assessee is not engaged in manufacturing activity in terms of section 2(29BA) of the I.T. Act, 1961 ? 4. Whether the Ld. CIT(A) was correct in deleting the disallowance Rs. 46,66,208/- claimed under the head "Repair & Maintenance" u/s.37(1) of the Act since the assessee could not produce sufficient documentary evidences to substantiate his claim? 5. Whether the Ld. CIT(A) was correct in deleting the disallowance Rs. 2,61,600/- u/s. 40(a)(ia) of the Act due to failure in deduction of taxes under section 194I of the Act? 6. That the assessee craves to add, delete or modify any of the grounds of appeal before or at the time of hearing. 3. Ground No. 1 raised by the assessee reads as ....
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....d limited to 100% ceiling in terms of the gross value of Fixed Capital Assets of the approved project which was extended further for another two years i.e up to eleven (11) years instead of nine years and the ceiling of incentive is also extended 125% of the gross value of the fixed capital assets vide no. INC(99)/EC­87(B) date of issue: June 4, 2002 Date of Effect; May 20, 2002. Thus, the assessee has been benefited regularly since inception of the scheme and received the incentive by way of sales tax remission on the amount which was collected and payable to the sales tax authority by the assessee but not deposited due to remission of sales tax. In this way the sales tax collected but not included as income and also not offered for income u/s.43B of 1. T. Act, 1961 on account of non­payment of collected sales tax of Rs. 8,65,96,694/­ for this year (period 01.04.2009 to 31.03.2010) before the due date of filing of return or forever. The assessee due to offered for taxation payable account is reduced by Rs. 8,65,96,694/­ and the assessee is benefited by the said amount which is covered by revenue in nature. Therefore, the diminution of revenue expense is tantamou....
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....ecord. We note that the assessee had claimed the amount of incentive of Rs. 8,65,96,694/­ as a capital receipt, which was received in the form of sales tax remission from the West Bengal Government under the "West Bengal Incentive Scheme. 1999". The assessee company had received incentive of Rs. 8,65,96,694/­ in the form of sales tax remission under the 'West Bengal Incentive Scheme, 1999' and which was credited to the profit and loss account. Under the said scheme, West Bengal Industrial Development Corporation Limited issued an "Eligibility Certificate" to the assessee being No. INC(99)/EC­S7(B) dated 4th June 2002. The Eligibility Certificate was issued for assessee's project at Block­Sutahata Block­I. Post Office Haldia­ 721602, Police Station Bhabhanipur District Midnapur (E) for the manufacture of blended LPG having capacity of 6,00,000 tonnes. As per the scheme the West Bengal Industrial Development Corporation Ltd sanctioned the incentive in the form of remission of sales tax on sale of finished goods due for payment by it for a period of 9 years subject to ceiling of 100% of the gross value of fixed capital assets of the approved project....
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....hat the method of calculation of incentive/subsidy is collection of sales tax but the purpose of giving the incentive was expansion of industries in the backward areas of the State of West Bengal. Since the assessee was not given the incentive for facilitating its business or trade, the amount received by the assessee on account of sales tax remission, was held to be capital in nature. For that we rely on the following judgments, Viz:(i) CIT vs. Rasoi Limited (2011­TIOL­320HC­KOL­IT) (Cal He) (ii) Balaji Alloys Limited vs. CIT (333 ITR 335) (J&K HC) ,(ii) CIT vs. Siya Ram Garg (HUF) (49 OTR 126) (P&H HC) (iv) OClT vs. Reliance Industries Ltd (88 ITO 273) (Mum ITAT). That being so, we decline to interfere in the order passed by ld CIT(A), his order on this issue is hereby upheld and grounds of appeal raised by the Revenue is dismissed. 10. Now, we shall take ground No.2 and ground No.4 which are identical and common, read as follows: 2. Whether the Ld. CIT(A) was correct in deleting the disallowance on expenditure of Repairs & Maintenance to the Plant & Machinery to the extent of Rs. 1,16,13,324/- for which no bills and vouchers were produced u/s.37(1)of ....
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....tained. 14. We note that the AO discussed his reasons for making disallowance of repairs expenses amounting to Rs. 1,16,13,324/­. The AO alleged that the assessee did not furnish original bills for verifying the genuineness of the claim. In absence of these bills, the AO observed that he could not also verify whether Section 40(a)(ia) had any application. Accordingly the AO disallowed the entire expenditure of Rs. 1,16, 13,324/­. On perusal of the impugned order it thus transpired that on 07.02.2014, the AO had required the assessee to furnish its explanation as to why the repairs expenses should not be disallowed on the ground of being capital in nature. It thus appeared that even by AO's own admission he had required the assessee to explain the nature of the expenditure i.e. whether capital or revenue. We note that nowhere the AO stated that he had required the assessee to produce original bills & vouchers but had required the assessee to explain the nature of expenditure, whether these are being revenue or capital. Hence, disallowance on ad­hoc basis without any cogent reasons is not justifiable. That being so, we decline to interfere in the order passed by ld....
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....d in Section 2(29BA) of the Act. In the impugned order the AO has extracted the information allegedly available in the public domain with regard to liquefied petroleum gas ('LPG'). According to AO, LPG is simply propane or butane which is flammable mixture of hydrocarbon gases used as fuel in heating appliances and vehicles. According to AO his study of the material downloaded from the internet confirmed that LPG was not exactly a new article which satisfied the condition prescribed in Section 2(29BA) of the Act. According to AO the raw materials, butane & propane used in manufacture of LPG can function like LPG individually and separately. According to AO sometimes both the materials blended together also form LPG where the items remain unchanged with a sealed container. According to AO chemical change, changing of name & production of new article or thing as claimed by the assessee does not occur. The AO therefore held that since the assessee did not manufacture or produce any new article or thing, it was not entitled to any deduction for additional depreciation under Section 32(1 )(iia) of the Act and disallowed the claim of the assessee. 18. Aggrieved by the stand....
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....employed exceeded Rs. 141 crores as on 31.03.2010.Therefore we note that the process employed by the assessee in production of LPG is considered as a "manufacture" under the provisions of the Central Excise Act,1944 and on production of LPG, the assessee pays excise duty. If under the provisions of the Central Excise Act, 1944, the production of LPG is considered to be a manufacturing activity then it does not appeal to logic that the same activity does not amount to manufacture under the Income­tax Act. 1961. 20. We note that raw materials, butane & propane have different chemical compositions and the end uses for butane & propane are much different from the LPG. Butane / Propane are primarily used as a source of energy for industrial purpose whereas blended LPG facts primarily as fuel for operating commercial vehicles or used as cooking gas. We note that both in terms of chemical composition as also with regard to its commercial use and application as also as a commercial product: propane. butane & LPG are regarded as different & distinct products. Merely because all the three products in themselves are considered as source of energy or power and these are consumed by d....
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....he commodity. But it is onlywhen the change or a series of changes takes the commodity to the point where commercially it can no longer be regarded as the original commodity but Instead is recognized as a new and distinct article that a manufacture can be said to take place. Process in manufacture or in relation to manufacture implies not only the production but also various stages through which the raw material is subjected to change by different operations. It is the cumulative effect of the various processes to which the raw material is subjected to that the manufactured product emerges. Therefore, each step towards such production would be a process in relation to the manufacture. Where any particular process is so integrally connect with the ultimate production of goods that but for that process processing of goods would be impossible or commercially inexpedient, that process is one in relation to the manufacture. 8. The aforesaid aspects were highlighted in Kores India Ltd. v. CCE [2005] 1 SCC 385 in the background of Central Excise Act, 1944 (in short the Excise Act') and Central Excise Rules, 1944 (in short the 'Excise Rules') and Central Excis....
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....urpose of production of mineral ores would come within the ambit of the word 'production' since ore is 'a thing', which is the result of human activity or effort. It has also been held by this Court in CIT v. N .C. Budharaja& Co. (1993] 204 ITR 412 that the word 'production' is much wider than the word 'manufacture'. It was said (page 423): The word 'production' has a wider connotation than the word 'manufacture'. While every manufacture can be characterised as production, every production need not amount to manufacture .... The word 'production' or 'produce' when used in juxtaposition with the word 'manufacture' takes in bringing into existence new goods by a process which mayor may not amount to manufacture. It also takes in all the by-products, intermediate products and reside rodeos which emerge in the course of manufacture of goods." 21. We also note that the assessee's process of production of LPG is subjected to levy of Central Excise Duty and the Excise Department which also falls under the Department of Revenue collects substantial amount of excise duty on the footing that the ....