Itxa/31/2011 Of The Commissioner Of Income Tax -1 Mumbai v. Thirumalai Chemicals Ltd

itxa31-11 IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.31 OF 2011 The Commissioner of Income Tax-1, MumbaiV/s. ..Appellant. M/s. Thirumalai Chemicals Ltd. ..Respondent. Mr. Vimal Gupta, senior Advocate with Ms. Padma Divakar for the appellant. Mr. Hiro Rai with Subhash Shetty for the respondent. CORAM : J.P. DEVADHAR AND M.S. SANKLECHA, JJ. DATED : 3RD DECEMBER, 2012 P.C. :- 1.Two questions of law are raised by the revenue in this appeal, which read thus :- (A)Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in holding that other expenses amounting to Rs.4,95,27,594/- that were capitalized in the Books of Account of the assessee Company, as such expenses related to the expansion of the business of the assessee Company, are allowable u/s.37(1) of the Income Tax Act ?law, the Tribunal was justified in holding that other expenses amounting to Rs.4,95,27,594/- that were capitalized in the Books of Account of the assessee Company, as such expenses related to the expansion of the business of the assessee Company, are allowable u/s.37(1) of the Income Tax Act ? (B)Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in remanding the issue related to computation of Book Profits u/s.1156JA to the file of CIT (Appeals) with the direction to consider the claim for deduction law, the Tribunal was justified in remanding the issue related to computation of Book Profits u/s.1156JA to the file of CIT (Appeals) with the direction to consider the claim for deduction itxa31-11 u/s.80HHC of the Income Tax Act in accordance with the Special Bench decision in the case of Syncome Formulations (I) Ltd. reported in 106 ITD 193 ? 2.The assessment year involved herein is AY 1998-99. 3. 3.In the assessment year in question, the assessing officer disallowed the expenditure of Rs.4.95 crores claimed by the assessee towards expansion of the existing business which include salaries and wages, legal and professional charges, miscellaneous expenses, stores and spares, power and fuel on the ground that they are capital in nature. The ITAT has recorded a finding that the said expenditure was incurred by the assessee for expansion of the activity of manufacturing the same product and not an expenditure incurred towards the feasibility or otherwise of some different product. The ITAT has distinguished the judgment of this Court in the case of CIT V/s. J.K. Chemicals Ltd. reported in (1994) 207 ITR 985 (Bom) by holding that in that case, the expenditure was incurred in relation to the feasibility of a different product whereas in the present case, the expenditure was incurred for expansion of manufacturing the same product and not a different product. In our opinion, the decision of the Tribunal is based on finding of fact and hence the first question cannot be entertained. itxa31-11 4.As regards the second question is concerned, counsel for the parties state that the said question stands answered against the revenue by the decision of the Apex Court in the case of CIT V/s. Bhari Information Tech. Sys. P. Ltd. reported in [2012] 340 ITR 593 (SC). Hence the second question cannot be entertained. 5. The appeal is accordingly dismissed with no order as to costs. (M.S. SANKLECHA, J.) (J.P. DEVADHAR, J.)