WASHBARIE TEA CO. (P) LTD.,KOLKATA vs. ACIT, CIRCLE - 4, KOLKATA, KOLKATA

The assessee’s former two identical substantive grounds challenge correctness of both the lower authorities’ action disallowing its claims of repairs to plant and machinery amounting to ₹41,33,389/- and that regarding its building of ₹16,89,068/-; respectively furtherance that the same is in the nature of capital expenditure. Learned Representatives strongly reiterate their respective stands against and in support of their respective stands. I find that main reason adopted by the Assessing Officer as well as CIT(A) for rejecting assessee’s revenue expenditure claim under the two head(s) is that the same exceed the corresponding written down value of the assets in Washabarie Tea Co. (P) Ltd. Vs. ACIT Cir-4, Kol. Page 2 issue. I find no reason to concur with the same since the Assessing Officer as well as the CIT(A) have failed to pin-point as to how the assessee’s impugned repairs are in any way hit u/s. 31 Explanation of the Act. It is noticed that the assessee has placed on record all the relevant details of its repair work on plant, machinery and building which has gone unrebutted right form scrutiny till date sufficiently indicating no new assets giving enduring advantage or expansion in capacity have been noticed till date. I therefore accept assessee’s first two substantive grounds on this count alone since the lower authorities have given no other reason except going by written down value of the corresponding assets. The assessee succeeds in its former two substantive grounds accoringly.

The assessee’s third substantive ground seeks to delete excessive bonus disallowance of ₹1,23,198/- made by both the lower authorities for the reason that it is in excess of corresponding provision made to the tune of ₹17,93,614/- as against actual payment of ₹19,16,847/- paid from 13.09 to 21.09.2007. Learned Departmental Representative fails to dispute the clinching fact that payment of bonus is allowable u/s. 43B qua the amounts as covered u/s 36(1)(ii) of the Act. The Hon'ble jurisdictional high court’s decision in Associated Pigments Ltd. vs. CIT 234 ITR 589 (Cal) holds that any claim of expenditure u/s 43B of the Act is allowable of actual payment regardless of the relevant accounting system followed by concerned assessee. I made it clear that there is no dispute between the parties about correctness of the bonus amount in principle. I accordingly delete the impugned disallowance of ₹1,23,198/- being in the relevant previous year of the actual payment u/s 43B of the Act.