TaxTMI 
TaxTMI 
2007 (8) TMI 327
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....arh Bench (A), Chandigarh (for brevity, "the Tribunal"), in ITA No. 388/Chandi/2001, in respect of the assessment year 1996-97. 2. The assessee derived income from manufacturing and sale of sugar, etc., and filed its return on September 26, 1996, for the assessment year 1996-97 declaring loss of Rs. 4,55,41,581. It is apposite to mention here that the trial production of sugar after setting up and construction of the plant of the assessee was commenced on February 23, 1996. The assessee consumed raw material in the form of sugarcane worth Rs. 2,80,71,662 and shown manufacturing expenses of Rs. 20,88,295. The assessment was completed on March 31, 1999, under section 143(3) of the Act and depreciation on plant, machinery and building, etc.....
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....l, New Delhi, which is stated to be pending for adjudication. 5. Learned counsel for the Revenue submitted before us that the following question of law would arise in this matter for determination of this court : " Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was right in law in cancelling the order passed by the Commissioner of Income-tax under section 263 by holding that the assessment order is neither erroneous nor prejudicial to the interests of the Revenue in spite of the fact that depreciation on plant and machinery, etc., was allowed by the Assessing Officer without the commencement of production of sugar on commercial basis?" 6. The main thrust of the argument of learned coun....
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..... 8. We have thoughtfully considered the submissions made by learned counsel for the parties, examined the record with the assistance of learned counsel and are of the view that there is no merit in the instant appeal and the same is liable to be decided against the Revenue and in favour of the assessee. It would be appropriate to make a reference to section 32 of the Act, as it stood at the relevant time, which reads thus : " 32.(1) Depreciation.- In respect of depreciation of buildings, machinery, plant or furniture owned, wholly or partly, by the assessee and used for the purposes of the business or profession, the following deductions shall, subject to the provisions of section 34, be allowed- (i) [omitted] ; (ii) in the cas....
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....escribed under this Act immediately before the commencement of the Taxation Laws (Amendment) Act, 1991. Explanation 1.-Where the business or procession of the assessee is carried on in a building not owned by him but in respect of which the assessee holds a lease or other right of occupancy and any capital expenditure is incurred by the assessee for the purposes of the business or profession on the construction of any structure or doing of any work in or in relation to, and by way of renovation or extension of, or improvement to, the building, then, the provisions of this clause shall apply as if the said structure or work is a building owned by the assessee. Explanation 2.- For the purposes of this clause "written down value of the b....