TaxTMI 
TaxTMI 
2010 (10) TMI 943
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.... undesirable credit to claim depreciation under Section 32 of the Income Tax Act, 1962, and pay duty from PLA otherwise payable after exhausting Cenvat credit balance thereby claiming refund of the same under Notification No. 39/2001-C.E., dated 31-7-2001? 2. Whether the option to avail Cenvat credit or claim depreciation under Section 32 of Income Tax Act, 1962 is a one time option or the assessee can choose to opt out of option once exercised? 3. Whether in a situation where benefit of an exemption notification is being availed in which mandatory condition to avail the substantive benefit is the utilization of the Cenvat credit, can assessee at his will opt out midway to avail the benefit ....
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....t utilise the entire available Cenvat credit towards payment of Central Excise duty and it was only if there was no balance in its Cenvat credit account, that the assessee could pay duty from PLA in the respective month and claim refund of the duty paid from PLA. Hence, the Cenvat credit balance of Rs. 2,68,08,644/- should have been utilised by the assessee in accordance with the provisions of the subject notification. Show cause notice came to be issued to the assessee on the ground that the assessee had violated the provisions of the subject notification; that the Cenvat credit balance of Rs. 2,68,08,644/- should have been utilised by the assessee in accordance with the provisions of the said notification whereas the assessee had claimed ....
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....mouflage the said intention the respondent had raised the issue of claiming depreciation under Section 32 of the Income Tax Act, 1961. 4. The facts as appearing from the record indicate that the respondent assessee in its Cenvat account for capital goods entered capital goods purchased by it from time to time for setting up the unit including details of duty paid on capital goods. In the monthly E.R.-1 return for December, 2004 filed on 10th January, 2005, the assessee had shown capital goods credit at Rs. 2,68,08,644/-. The unit started commercial production on 14th January, 2005. The assessee decided to forego the credit available on the capital goods as it intended to avail depreciation under Section 32 of the Income Tax Act, 1961 ....
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.... Cenvat account, it had not utilised the same. 6. Thus, the controversy that arises for determination is as to whether it was permissible for the respondent assessee to reverse the Cenvat credit taken in its Cenvat account without utilizing the same in terms of the subject notification. 7. From the facts noted hereinabove, it is apparent that the assessee had taken Cenvat credit on the capital goods till December, 2004, however, as the assessee wanted to avail of the benefit of depreciation under Section 32 of the Income Tax Act, 1961 even in respect of the central excise duty component, before utilizing the credit it reversed the same, consequently the opening balance in the month of January, 2005 was Nil. The assessee commence....