TaxTMI 
TaxTMI 
2011 (5) TMI 653
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....sessment year the appellant made provision in the accounts amounting to Rs. 16,37,358 towards stores and spares and also had sold off / used store spares valued at Rs.35,40,882 and credited this amount to the profit & loss account. The assessee claimed that the company was entitled to deduction of Rs.35,40,882/-. As per the judgment in the case of CIT Vs Herdilla Chemicals 225 ITR 532 the assessee claimed that an amount of Rs.19,03, 124 (Rs.35,40,882 - Rs.16,37,758) should have been allowed as deduction while computing the taxable income for the year. However, the Ld. Additional Commissioner did not allow the claim of Rs.35,40,882/- and added back the provision of Rs.16,37,758/-. The aggrieved assessee has filed an appeal before the CIT (A). The Ld. CIT (A) held as follows: "6.2 The issue was decided against the assessee by the Hon'ble ITAT for the AY 97-98 with the direction the appellant would be entitled to claim deduction on account of loss in the year in which the items were sold. Respectfully following the decision of ITAT, the Assessing Officer is directed to allow credit for value of stores and spares sold during the year of Rs.35,40,882/-. The disallowances made by the As....
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....not apply. No other contention has been raised. Therefore, following the judgment of Bombay High Court in the case of Heredilla Chemicals Ltd (supra) we do not find any merit in the appeals of the assessee on this issue. The orders of the learned CIT (A) are therefore upheld on this issue." Respectfully following the decision of the co-ordinate bench we uphold the order of CIT (A) on this issue. However we make it clear that the assessee would be at liberty to claim deduction on account of loss in the years in which such items are sold. The Assessing Officer shall look into the matter if necessary evidences are filed before him. To that extent, the order of the learned CIT (A) is modified. 6. Ground No.1 Part-2 is not pressed by the Assessee and is dismissed as not pressed. 7. The second issue is disallowance u/s 14A read with Rule8D. The facts of the issue is that the assessee claimed dividend income of Rs.7,50,76,831/- s exempt from tax. The Assessing Officer worked out the disallowance u/s 14A in accordance with Rule8D at Rs.2,35,68,500/-. On further appeal before the CIT(A), the counsel for the assessee submitted that the assessee had already disallowed the amount of Rs. 1,3....
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....tallized during the year. Similar expenseswere allowed by CIT(A) for AY 05-06 vide order dt. 10.07.2008. The Hon'ble ITAT for AY 97-98 also allowed such expenses. The observations of the ITAT are as under: 'The next issue relates to the disallowance in respect of 'Prior Period Expenses'. This issue arises in the Assessment Years 1997-98, 98-99 and 2000-01. The disallowance has been made without much discussion by the Assessing Officer in these years but the learned CIT (A) following his earlier order decided the issue in favour of the assessee. It had been contended before learned CIT (A) that certain expenses are not supported by the bills/vouchers and sometimes the claims are not processed and accepted by the accounts department. As and when such bills/vouchers are received or claims are settled, the expenses are booked through sometimes it may relate to the earlier years. It was also submitted that such procedure was being followed consistently. The learned CIT (A) accepted the contention of the assessee. The learned CIT(A) also took into consideration the decision of Bombay High Court in the case of Nagri Mills Co Ltd. 33 ITR 681 wherein their Lordships observed that where the....
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....IT (A) upheld the contention of the assessee and consequently, disallowances made by the Assessing Officer were deleted. Aggrieved by the same, the Revenue is in appeals before the Tribunal. After hearing both the parties, we find that the issue is covered in favour of assessee by the decision of the Tribunal dated 31st December, 2004 in assessee's own case for the Assessment Year 1 990/-91, wherein the system of accounting adopted by the assessee has been accepted. Therefore, following the same, the orders of the learned CIT (A) are upheld". Respectfully following the decision of the Co-ordinate Bench in assessee's own case for earlier years, we dismiss the departmental appeal on this issue. 11. The next issue in the Departmental appeal is against grant of depreciation on buildings. The Assessee claimed depreciation in respect of a Flat which has been used for business purposes. The Assessing Officer disallowed depreciation on the following grounds. a) The assessee acquired shares and not building and hence, no depreciation is allowable. b) The assessee is not the owner of the building and hence, it cannot claim depreciation. c) The assessee's claim that above transaction in ....
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....pect of r value of Stores & Spares sold. 15. As held by us in Assessee's appeal supra, on the same issue, the Assessee is not entitled to any deduction on the provision made for obsolete stores/ spares, but is entitled to claim deduction of loss arising from actual sale of stores/spares. The Assessing Officer shall verify the correctness of computation of loss. With the above directions the Departmental appeal on this issue is dismissed. 16. The next issue in the Departmental appeal is whether Depreciation is to be allowed on the software- ERP system capitalised at the rate of 60% or 25%. 17. The CIT(A) has held as follows: "The appellant has spent a sum of Rs.263. 74 lacs for acquiring ERP software. The appellant claimed 60% depreciation while Assessing Officer allowed 25% as applicable in case of intangible assets. The difference is Rs.12,16,326/-. The appellant pleads that if items fall under specific category 'computer software' (60% depreciation), that depreciation is to be allowed over general category 'intangible assets' (25% depreciation). It has further pleased, if an item falls under both categories, the one which is favourable to assessee has to be followed. The iss....
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....was only a mere book entry which was set off against depreciation. This amount was capital subsidy received in the year 1992. Therefore the same cannot be treated as income of the appellant for this year. Hence the addition made by Assessing Officer is deleted." 22. Aggrieved Revenue is on appeal before us. We find that ITAT for the A.Y 2005-06 has held as follows: "We have considered the rival submissions. We find that the assessee has set up a plant of Nitro Phosphate in the year 1992 and had received incentive from the Government on the Commissioning of the plant, which was reflected in the balance sheet of the assessee as a special reserve. This amount of special reserve is set off against the book depreciation. The CIT(A) has recorded that since the assessee had already added the entire book depreciation and has claimed depreciation as per Income Tax Rules and, therefore, the set off of special reserve in book depreciation do not affect the income of the assessee and that since the amount was received in the year 1992, therefore, the same could not be treated as income of the assessee in this year. We find that the revenue could not controvert the submission of the ld. Couns....