TaxTMI 
TaxTMI 
2013 (3) TMI 120
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....ssets were not used during the year although it remains part of block of assets. The action is unjustified and unwarranted and against the decisions of various Tribunals and High Courts. 3. Ground no.1 is regarding the disallowance u/s 14A r.w.r 8D. 5. We have heard the ld AR as well as the ld DR and considered the relevant material on records. Since the assessment year involved in the instant case is 2006-07 and Rule 8D is applicable only prospectively i.e. from Assessment Year 2008-09 as held by the Hon'ble High Court; therefore, the matter needs to go back to the file of the Assessing Officer for fresh adjudication in the light of the latest decision of the Hon'ble Jurisdictional High Court in the case of Godrej Boyce Mfg CO Ltd vs DCIT reported in 328 ITR 81. We, therefore, restore this issue to the record of the Assessing Officer for fresh adjudication in the light of the decision cited supra and in accordance with law after giving due opportunity of being heard to the assessee. 6. Ground no.2 is regarding disallowance of depreciation on plant and machinery. 6.1 The brief facts relevant to the controversy are that the assessee was engaged in the business of manufacturing C....
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....der income tax Act in view of the concept of block of assets. He has further contended that under the concept of block of asset, depreciation has to be allowed on the opening written down value of the entire block for a particular assessment year. The block contains plant & machinery have also various other assets, which were used during the year and on which depreciation has been granted by the Assessing Officer. Once the assets are part of the block of assets, it looses its individual cost or written down value in a way it looses its identity. Thereafter, depreciation is allowable on the entire block of assets. The ld AR of the assessee has submitted that when both the plant and machinery are part of block of assets comprising various other assets. He has relied upon the following decisions: i) Decision of Hon'ble Bombay High Court in the case of G R Shipping in IT Appeal no.598 of 2009 dt 28.7.2009 ii) Decision of Hon'ble Gujarat High Court in the cased of Sonal Gum Industries (322 ITR 542) iii) Decision of Delhi High Court in the case of Yamaha Motor India P. Ltd. (328 ITR 297) iv) Decision of the ITAT Mumbai in the case of Untex Products P. Ltd. (22 SOT 429) v) Decision o....
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....d not help the case of the assessee. Further, the assessee has withdrawn the claim of depreciation by filing revised computation of income as recorded by the CIT(A) in para 6 of his order as under: "6. On this issue also, the disallowance has been accepted by the appellant by filing revised computation of inco9me. An appeal does not lie against an accepted addition unless the appellant can show that the acceptance was on the basis of wrong interpretation of law of fact. Such is not the case with the appellant. In its written submission dt 20th May 2010, the appellant has only dealt on the merits of the disallowance without giving any evidence of the acceptance at the time of assessment proceedings being made out of wrong appreciation of the facts or law. In view of the above, the ground of appeal is dismissed." 9. In view of the above discussion and the facts and circumstances of the case, we do not find any merit or substance in the claim of the assessee; accordingly the ground raised by the assessee is dismissed. 10. For the AY 2007-08, the assessee has raised the following effective grounds: (1) The Learned Commissioner of Income Tax (Appeals) has erred in law and on ....
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....and against the principal of natural justice. The Learned Commissioner of Income Tax (Appeals) has even not considered the direct decision of Jurisdictional High Court while disposing off Ground No. 1 and 5 of the appeal. 11. Ground no.1 is regarding depreciation on factory and plant & machinery. 12. This ground is common as in the AY 2006-07. Therefore, in view of our findings for the AY 2006-07, this ground of the assessee is dismissed. 13. Ground no.2 is regarding disallowance of claim of obsolete stock. 13.1 During the year the assessee has written off the stock value of `. 4,82,213/- declaring the same as obsolete stock. The Assessing Officer found that the inventory was not actually taken out and the same was continued in the possession of the assessee during the year. The Assessing Officer further noted that the Board resolution declaring the said asset as obsolete was passed on 29th June 2007 which is after the closing of the accounting period. The Assessing Officer has also taken note of the fact that the permission of the Exercise Authority to disposes off was not taken up to the end of the previous year. Accordingly, by following the decision of the Hon'ble jurisdic....
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....arket changes. Thus, the ld AR has submitted that depreciation as provided under AS-6, the depreciation includes proportionate amount of cost of the asset due to wearing out by effluxion of time and even if the asset is not used, the depreciation is required to be provided for wearing out of the asset due to effluxion of time. He has further contended that when the depreciation written down in accordance with the provisions of part II & III of Schedule VI of the Companies Act and AS-6, then, the accounts so prepared in accordance with parts II & III of Schedule VI of Companies Act and certified by the Auditors and adopted by the shareholders at the Annual General Meeting, the Assessing Officer cannot make any adjustment in the computation of book profits u/s 115JB except for the items listed in Explanation (1) of sec.115JB-II of the Act as held by the Hon'ble Supreme Court in the case of Apollo Tyres Ltd vs CIT reported in 255 ITR 273. He has also relied upon the decision of the Hon'ble jurisdictional High Court in the case of Kinetic Motors Co ltd reported in 262 ITR 330 and submitted that when the deprecation was actually debited to the P&L account and certified by the Auditors, ....
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....f this analogy of the appellant is followed in every case then it will render the provisions of the I.T. Act infructuous. Further, I would like to observe that the decision of the Hon'ble Apex Court was based on different facts where there was no such issue of any prima fade wrong claim of any deduction, more so of any such wrong claim of depreciation u/s. 32 where the company under mandatory law was forced to shut down its manufacturing establishment. Further, with the passage of time there is also diminution In the value of the said assets even though they are not used for the purpose of business of the assessee during the year and as such the said addition would also be covered by clause (i) inserted under Explanation -1 of section 115JB after the decision of the Hon'ble Apex court given in the case of Apollo Tyres Ltd. 255 ITR 273. Hence, the Assessing Officer was fully justified in adding back the depreciation claimed on the factory building and on plant & machinery. Accordingly, the contentions raised by the appellant in this regard are rejected." 17.1 Once the assessee closed the factory then the decision of the assessee to book the depreciation of dismantled assets ....
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....f Parts II and III of Schedule VI22 to the Companies Act, 1956 (1 of 1956) : Provided that while preparing the annual accounts including profit and loss account,- (i) the accounting policies; (ii) the accounting standards adopted for preparing such accounts including profit and loss account; (iii) the method and rates adopted for calculating the depreciation, shall be the same as have been adopted for the purpose of preparing such accounts including profit and loss account and laid before the company at its annual general meeting in accordance with the provisions of section 210 of the Companies Act, 1956 (1 of 1956) : Provided further that where the company has adopted or adopts the financial year under the Companies Act, 1956 (1 of 1956), which is different from the previous year under this Act,- (i) the accounting policies; (ii) the accounting standards adopted for preparing such accounts including profit and loss account; (iii) the method and rates adopted for calculating the depreciation, shall correspond to the accounting policies, accounting standards and the method and rates for calculating the depreciation which have been adopted for preparing such accounts includin....
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....ompanies Act. However, the Assessing Officer cannot disturb the Net Profit as shown by the assessee where there are no such allegations, fraud or misrepresentation but only a difference of opinion as to whether a particular amount should be properly shown in the profit and loss account or in the Balance Sheet. (2) If accounting policies, accounting standards not adopted for preparing such accounts and method, rate of depreciation which have been incorrectly adopted for preparation of profit and 1059 account laid before the Annual General Meeting. Except for the above two cases, the Assessing Officer has no power to alter the net profit shown L the companies for the purpose of computing the book profit. Thus, it is clear that under MAT, the Assessing Officer should take the net profit as computed by the assessee and then make the adjustments under section 11 5JB of the Act. It is common that some companies follow an accounting year under the Companies Act, 1956 which is different from the financial year under Income-tax Act, 1961. These companies generally prepare two sets of accounts - one for Companies Act and another for Income-tax Act. The reason being different accounting poli....
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....he assessee. 17.5 A similar view has been taken by the coordinate Bench of the Tribunal in the case of CIT vs Bombay Diamond reported in 33 DTR Mum(Trib) 59 vide order dated 30.11.2009. 17.6 It is clear from the above decision that the Assessing Officer has power to examine whether the accounts are maintained as per the Accounting Standard and policies as provided under the Companies Act. The Special Bench of the Tribunal, after considering the decision of the Hon'ble Supreme Court in the case of Apollo Tyres Ltd. (supra) as well as the decision of the Hon'ble jurisdictional High Court in the case of Akshay Textiles Trading & Agencies (P.) Ltd. reported in 304 ITR 401 & the decision of the Bombay High Court in the case of Veekaylal Investment Co. (P.) Ltd. reported in 249 ITR 597 has taken a view that the decision in the case of Veekaylal Investment Co. P. Ltd. [supra] has not been overruled by the decision in the case of Akshay Textile Trading & Agencies Pvt. [supra]. Accordingly, we do not find any error or illegality in the orders of the lower authorities on this issue. 18. The last ground is regarding levy of interest u/s 234B on MAT. 19. We have heard the ld AR as well as ....