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The present are cross appeals, one by the assessee and the other by the Revenue against the order of the Commissioner of Income Tax (Appeals), Chandigarh
[hereinafter referred to as ‘CIT(A)’], dated 22.10.2013 relating to assessment year 2008-09, passed u/s 250(6) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’).
2. Since both the appeals arose out of the same order of the CIT(A) involving identical facts and circumstances and the same have been heard together and are being disposed off by this common order for the sake of convenience. First we take up the appeal of the assessee in ITA No .1156/Chd/2013.
ITA No .1156/Chd/2013 (A s se s see ’ s Appea l ):
3. The assessee in this appeal has taken the following grounds:
“1. That the Ld. CIT (A) is not justified in confirming the assessment made by the Ld. A. 0. u/s 143 (3) by holding that assessment is not barred by limitation, whereas the assessment made by the Ld. A. O. u/s. 143 (3) is barred by limitation and be quashed.
2.a) That the Ld. CIT (A) is not justified in confirming the addition of Rs.10,12,24,416/- by holding that the said expenditure was treated as pre-operative expenditure by the appellant. How can the appellant claim expenditure as revenue expenditure, once it has itself named and has claimed it as pre-operative expenditure.
b) That without prejudice to above, the appellant disputes the quantum of addition.
3.a) That the Ld. CIT (A) is not justified in confirming the disallowance of interest amounting to Rs.1,80,52,000/- on adhoc basis
b) That without prejudice t above, the appellant disputes the quantum of disallowance.
4. That the appellant craves leave for any addition, deletion or amendment in the grounds of appeal on or before the disposal of the same.”
Ground No .1 :
4. At the outset, the Ld.Counsel for the asssessee has submitted that as per the instructions of his client, he does not want to press ground No.1. Hence, ground No.1 raised by the assessee is dismissed as not pressed.
Ground No .2 :
5. Vide ground No.2, the assessee has agitated the confirmation of addition made by the A.O. in respect of preoperative expenditure incurred by the assessee for expansion of its business by way of setting up a new division for additional models of commercial vehicles.
6. The brief facts relevant to the issue are that the assessee has been engaged in the business of designing, development, manufacture, assembling, marketing and distribution of commercial vehicles. In the previous year relevant to the assessment year under consideration, the assessee, to expand its existing portfolio of commercial vehicles, had set up a new division within its existing premises for manufacturing additional models of commercial vehicles i.e. luxury bus bodies with new design and technology. The assessee for the above new division incurred the following expenditure during the year:
A total Capital work-in-progress = Rs.8090.59 lacs
Net of amount recovered from sale = Rs. 81.57 lacs of vehic es
7. The assessee capitalized all the aforesaid expenditure net of sale realization under the head “capital work-inprogress”. The assessee accordingly filed its original return of income on 28.9.2008 declaring the aforesaid expenditure as capital in nature. However, later on, the assessee filed a revised return on 26.3.2009 claiming additional deduction