| Case ID |
201627f9-b202-4c38-9f0a-ebae09891b11 |
| Body |
View case body. Login to View |
| Case Number |
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| Decision Date |
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| Hearing Date |
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| Decision |
The case revolves around the capitalisation of expenses associated with shares issued to foreign collaborators for technical know-how and the payment of rent for housing foreign experts during plant construction. The Kerala High Court upheld the Tribunal's decision, allowing depreciation on the capitalised value of shares and rent payments. It established that the shares were indeed a depreciable asset, reinforcing the need for proper accounting of capital expenditures related to technical expertise in plant erection. The court emphasized that such expenditures are essential for the acquisition of capital assets, thereby validating the assessee's claims for depreciation. |
| Summary |
This case addresses critical issues regarding the capitalisation of expenses under the Income-tax Act, 1961, particularly focusing on depreciation claims related to shares issued for technical know-how and rental payments for expert accommodations. The Kerala High Court's ruling underscores the importance of proper accounting practices in capital expenditures and the eligibility for depreciation on such expenditures, which can significantly impact the financial statements of companies engaging in foreign collaborations. The judgment clarifies that expenditures directly linked to plant erection, including payments for technical expertise and housing, can be capitalised, thus allowing for depreciation claims. This case serves as a precedent for future cases dealing with similar accounting practices and the treatment of foreign collaborations in the context of income tax assessments. |
| Court |
Kerala High Court
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| Entities Involved |
Protein Products Ltd.
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| Judges |
T. Kochu Thomman,
K.P. Radhakrishna Menon
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| Lawyers |
P.K.R Manon,
N.R.K. Nair,
Jose Joseph
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| Petitioners |
Not available
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| Respondents |
Commissioner of Income Tax,
Protein Products Ltd.
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| Citations |
1987 SLD 3319 = (1987) 167 ITR 157
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| Other Citations |
CIT v. English Indian Clays Ltd. [1983] KLT 1079,
Lohia Machines Ltd. v. Union of India [1985] 152 ITR 308,
Scientific Engg. House (P.) Ltd. v. CIT [1986] 157 ITR 86,
Challapalli Sugars Ltd. v. CIT [1975] 98 ITR 167,
CIT v. L.G. Balakrishnan & Bros. (P.) Ltd. [1974] 95 ITR 284,
Ambica Mills Ltd. v. CIT [1964] 54 ITR 167,
Habib Hussein v. CIT [1963] 48 ITR 859
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| Laws Involved |
Income-tax Act, 1961
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| Sections |
32,
80J
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