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Showing contexts for: testing charges in Niit Gis Ltd., New Delhi vs Department Of Income Tax on 24 February, 2015Matching Fragments
697/D13, 315/D/12,814/D/13 AY: 2006-07, 2007-08
8. During the first appellate proceedings, the CIT(A) considered the explanation and submission of the assesssee and held that even if various amounts of internet brandwith testing charges totalling to Rs.97,445 are considered to be revenue expenses and are not considered part of plant and machinery for the purpose of substantial expansion and another amount of Rs.16,020 spent for site survey and commissioning of internet Bandwidth pertaining to earlier year cannot be treated as part of substantial expansion during the relevant previous year even after disallowing other capitalized charges, the assessee has been able to justify the increase of plant and machinery to the tune of Rs.18,35,423 (Rs.19,48,888 - Rs. 1,13,465) at Parwanoo unit. We are also in agreement with the conclusion of the CIT(A) that this amount of increase of plant and machinery during the year under consideration viz. Rs.18,35,423 is more than 50% of the opening value of the plant and machinery for Parwanoo i.e. Rs.34,63,220 (as on 1.4.2005) then the claim of expansion of Parwanoo unit was rightly held in favour of the assessee. We also note that the Director of Industries, H.P. also acknowledged the substantial expansion of Parwanoo unit as on 24.11.2005 by the certificate dated 8.2.2006 which has not been controverted by the AO which clarifies that after substantial expansion as on 24.11.2005, the investment in plant and machinery was increased from Rs.33.32 lakh to Rs.52.36 lakh during the year under consideration. 697/D13, 315/D/12,814/D/13 AY: 2006-07, 2007-08
C.O.No.315/Del/2012 of the assessee for AY 2006-07
19. The assessee company has raised sole cross objection for this year which reads as under:-
"l. That the Commissioner of Income Tax (Appeals) erred on facts and in law in holding that expenditure incurred towards Internet bandwith testing charges aggregating to Rs. 97,445/- and site survey and commissioning charges for Internet bandwith amounting to Rs. 16,0201-, cannot be treated as addition/capitalization to "Plant and Machinery" in order to determine "substantial expansion" of Parwanoo unit for the purposes of claiming deduction under section 80lC of the Income Tax Act, 1961 ('the Act')."
20. Ld. Senior counsel submitted that the CIT(A) was not justified on fact and in law in holding that expenditure incurred towards Internet bandwith testing charges aggregating to Rs. 97,445/- and site survey and commissioning charges for Internet bandwith amounting to Rs. 16,020/-, cannot be treated as addition/capitalization to "Plant and Machinery" in order to determine "substantial expansion" of Parwanoo unit for the purposes of claiming deduction under section 80IC of the Income Tax Act.
21. Supporting the assessment order as well as appellate order of the CIT(A), ld. DR submitted that when the assessee company itself has accepted that even if 697/D13, 315/D/12,814/D/13 AY: 2006-07, 2007-08 various amount of internet bandwith with testing charges are considered to be revenue expenditure, then also the amount of new plant and machinery will be more than 50% of the opening of the value of plant and machinery at Parwanoo unit which will qualify for substantial expansion. Ld. DR further contended that another amount of Rs.16,020 was spent for site survey and commissioning charges for internet bandwith pertaining to earlier year cannot be treated as part of substantial expansion during the relevant previous year. Ld. DR vehemently contended that when assessee company itself could not substantiate that the said impugned expenses were part of substantial expansion, then the revenue authorities have no option but to exclude the same at the time of calculation of amount of substantial expansion.