PRINCIPAL COMMISSIONER OF INCOME TAX Vs. SESA RESOURCES LTD.
HIGH COURT OF BOMBAY
Principal Commissioner Of Income Tax
Sesa Resources Ltd.
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(1.) A. Introductory The appellant, the Principal Commissioner of the Income Tax, Goa ("PCIT"), is in appeal against the order of 20th August 2015 of the Income Tax Appellate Tribunal, Panaji Bench ("ITAT"). Ms Lin hares for the appellant submits that that substantial questions of law arise out of this order. In paragraph 6 these have been set out:
"A. Whether on the facts and in the circumstances of the case, the Hon'ble ITAT is right in deleting the addition of Rs. 1,53,313 on account of disallowance of excess claim of depreciation @60% as against 15% on UPS at par with the depreciation rate on computers when UPS are electrical equipments as held in the decision of Hon'ble Delhi Bench of ITAT in Nestle India Ltd. v. DCIT (2007) 111 TTJ (Del) 0498?
B. Whether on the facts and in the circumstances of the case, the Hon'ble ITAT is right in deleting the addition of Rs. 4,27,39,010 towards disallowance of expenditure of interest paid on loans taken at interest and advanced the same money to sister concerns without charging any interest, even it the assessee could not produced the evidence to show that the advances were used for business purpose as held in the case of Mir Mohd. Ali v. Commissioner of Income Tax in 38 ITR 413?
C. Whether on the facts and in the circumstances of the case, the Hon'ble ITAT is right in deleting the addition of Rs. 21,19,97,295 considering that the expenses incurred on repairs and maintenance of the old vessel can only be categorized as current repairs as the same has been incurred to keep the vessels in good condition without increasing the capacity by ignoring the decision of the Hon'ble Supreme Court in the case of Ballimal Naval Kishore v. Commissioner of Income Tax (1997) 224 ITR 414 and Commissioner of Income Tax v. Saravana Spinning Mills (P) Ltd. (2007) 163 Taxman 196, wherein it was held that the object of current repairs should not be obtaining a new or fresh advantage and every expenditure does not come automatically under current repairs?
D. Whether on the facts and in the circumstances of the case, the Hon'ble ITAT is right in deleting the addition made by the AO on account of disallowance of additional depreciation amounting to Rs. 88,24,295 by ignoring the decision of Hon'ble Supreme Court in the case of Commissioner of Income Tax v. Gem India Manufacturing Co. (2001) 249 ITR 307 (SC) and Lucky Minmat (P) Ltd. v. Commissioner of Income Tax (2001) 116 Taxman 1 (SC)." B. Factual Background
(2.) The assessee company, Lesa Resources Ltd ("SRL"), previously known as VS Dempo and Co Pvt Ltd, is engaged in mining, mineral processing for exports, shipping and stevedoring. SRL filed an e-return of Income on 29th September 2009. It declared a total income of Rs 3,55,13,43,220. The return was processed and the case was taken up for scrutiny. A notice under section 143(2) of the Income Tax Act 1961 ("the Act") was issued to SRL on 28th August 2010.
(3.) By an order dated 29th December 2011, the Assessing Officer ("AO") inter alia disallowed the expenditure incurred on repairs amounting to Rs 21,19,97,295 on two marine vessels called MV Priyamvada and MV Goan Pride. The AO also reworked depreciation on an Uninterrupted Power Supply installation ("UPS") at Rs 1,53,313/- and disallowed an amount of Rs 4,27,39,010/- as interest on loans given by SRL to its sister concerns. Lastly, the AO rejected additional depreciation of Rs 88,24,295/- on equipment, plant and machinery, holding that the extraction and processing of iron ore was neither manufacture nor production within the meaning of Section 32(iia) of the Act.;
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