TaxTMI 
TaxTMI 
2012 (8) TMI 549
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....,183/- claimed towards Loss on sale of worn-out machinery by stating that on principles the same is disallowed, but may be considered to have been allowed for the purposes of re-computation of taxable income" Ground by Revenue : Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) was justified in deleting the disallowance of loss of Rs. 13,67,183/- incurred on account of sale of worn out machinery when the assessee has failed to substantiate as to whether the scrap was used in the business or was reflected in stock? 3. Facts of the case in brief are that the assessee company is engaged in the business of Alloy, Iron casting and components for Automobiles and Internal combustion Engines. During the course of assessment proceedings, the AO noted that a sum of Rs. 13,67,183/- has been debited on account of loss on sale of scrap. Since the loss is related to capital assets the AO was of the opinion that the same is required to be added in computation of income. Since the same has not been added in the computation the AO asked the assessee to show cause as to why the same should not be added. In response to the same the assessee replied as under : ....
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....y the assessee company for its own production. The company buys hundreds of tons of scrap from the market as scrap constitutes an input for their production and "there was no point in first selling it out and then buying it". Accordingly it was submitted that no realization of money was reflected by them in their books as no assessee would show any buying and selling of its own goods with itself. It was further submitted that there is no need or scope for keeping any separate record of production or output as the quantum of the said scrap was hardly 22 to 25 tonnes as against more than 5000 tonnes of scrap used by them for production. It was submitted that the assessee has not gained in any way by not estimating the realizable value of that scrap, because if the value of the scrap had been considered, it would have had the effect of enhancing the assessee's cost of input by the same amount. Accordingly it was submitted that the matter may not be referred back to the AO for the year under consideration as was done in A.Y. 2004-05. 6. Based on the arguments advanced by the assessee, the Ld. CIT(A) held as under: "13. I have considered the matter carefully and have also perus....
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....n so far as the same is disallowed in principle upon consideration of the clear provisions of S.32(1)(iii), but may be considered to have been allowed for the purposes of re-computation of taxable income for the purposes of giving appeal effect." 6.1 Aggrieved with such order of the CIT(A) the assessee is in appeal before us. 6.2 The learned counsel for the assessee drew the attention of the Bench to provisions of section 32(1)(iii) and submitted that the same relates to depreciation in case of Building, Machinery, Plant or Furniture in respect of which depreciation as claimed and allowed under Clause (1) and which is sold, discarded, demolished or destroyed in the previous year. He submitted that in every case the discarded/obsolete machineries need not be sold and can be used in the business of the assessee as a raw material. He accordingly submitted that the matter may be restored to the file of the AO for verification. The learned D.R. on the other hand has no objection if the matter is restored to the file of the AO for verification. After hearing both the sides and in view of the submissions by the learned counsel for the assessee as well as the learned D.R. that the....
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....ient to meet the negligible investment shown in the balance sheet and no part of the borrowed fund has been utilised for acquiring shares and bonds, the income of which is exempt. Referring to the decision of the Kolkata Bench of the Tribunal in the case of Balrampur Chinni Mills Vs. DCIT reported in 140 TTJ 73 he submitted that provisions of section 14A and Rule 8D can be invoked only when the AO is not satisfied with regard to the accounts of the assessee that the claim of expenditure made by the assessee is not correct and the claim made by the assessee that no expenditure has been made in relation to income which does not form part of total income under the Act. When neither the AO nor the CIT(A) has given any finding that having regard to the accounts of the assessee, they are not satisfied with the correctness of the claim of expenditure made by the assessee or the claim made by the assessee that no expenditure has been incurred in relation to income which does not form part of the total income, no addition can be made. 10. Referring to the decision of the Hon'ble Mumbai High Court in the case of CIT Vs. Godrej & Boyce manufacturing company Ltd. reported in 2 DTR (Bombay) ....
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....w, the Ld. CIT(A) was justified in deleting the disallowance of depreciation on windmill amounting to Rs.8,71,740/- on civil construction work, transformer, DP etc. And in not applying the ratio of the Hon'ble ITAT, Pune in the case of Poonawalla Finvest & Agro Pvt. Ltd., Vs. ACIT wherein the Hon'ble ITAT has held that the higher rate of depreciation is not admissible in respect of civil construction work of windmill" 14. Facts of the case in brief are that the AO disallowed an amount of Rs. 8,71,740/- out of the total depreciation claimed by the assessee on wind mill by taking the normal rate of depreciation in respect of the Civil construction and electrical equipments as against higher rate of depreciation claimed by the assessee. For this purpose he followed the order of his predecessor for Assessment Year 2004-05. 14.1 In Appeal, the learned CIT(A) following the decision of the Tribunal in assessee's own case for Assessment Year 2004-05 allowed the claim of the assessee. The relevant observations of the learned CIT(A) at Para No. 20 and 21 reads as under : "20. I have considered the matter carefully. In their order dated 31-03- 2009, the Hon'ble ITAT Pune B-Ben....
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....) paid under Rule 57F(4) as deposit for goods sent to vendors for job-work on which CENVAT could not be claimed as the material was received late. The assessee explained that the same represented accumulated amount which was paid towards Excise duty from October 1997 onwards. At the time of clearance of material from the assessee's factory to the party to whom the material is sent for processing, the assessee pays 10% amount as excise duty. When the material is received back the assessee claims this excise duty as MODVAT/CENVAT. However, due to administrative delay over the years, the said amount of CENVAT was not claimed by the assessee and was carried forward and shown as advance recoverable which has been written off in the P.Y. under consideration. 20. As regards the advance paid to M/s. IOTA Technologies Ltd., the AO accepted the assessee's explanation and as such, there is no dispute regarding this amount. 21. As regards the payment to PCMC, the AO was of the view that the same was of capital nature and also that the payments related to earlier years and not to the PY under consideration. Accordingly, she disallowed the said amount of Rs. 2,70,490/-. 22. In so far as....
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....e AO by holding as under : "19. Having given careful consideration to the matter, I am not in a position to agree with the claim advanced by the Appellant citing the provisions of section 36(1)(vii). The Appellant-company has categorically asserted in their written submissions before me that the said amounts were revenue items paid as a part of sale price of goods, and duly treated as revenue payments. As such, both the amounts in question, namely octroi and central excise/cenvat, were clearly sums "payable by the assessee by way of tax, duty, cess or fee, by whatever name called, under any law for the time being in force" within the meaning of section 43B of the Act. Under the said provision, which overrides the provisions of section 36 and section 37, such sums are allowable only for the P.Y. in which the sum is actually paid, irrespective of the P.Y. in which the liability to pay such sum was actually incurred by the assessee according to the method of accounting regularly employed by them. In this case, as per the Appellant's own admission, "it is not doubted, rather it is admitted, that these pertain to earlier years". That being the case, I hold that the two amounts in que....