2015 (1) TMI 701

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....sideration in the present appeals:            "(A) Whether the Tribunal is right in law and and on facts in deleting the disallowance of depreciation of Rs. 17,67,90,015/- made by the A.O holding that claim of depreciation on enhanced value of assets by the assessee was not with an intention to reduce tax liability and also that the AO has erroneously invoked the Explanation - 3 of Section 43(1) of the Income Tax Act and also holding valuation report of Valuer as valid despite of the fact brought on record by the AO that valuation report was made after the transaction and 40% addition on account of time factor was not a prescribed method for valuation of plant and machinery?    &....

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....nt books and if it is so found the claim be allowed following the reasoning laid down by the Apex Court. The Tribunal has passed a common order for the assessment years 1997-98, 1998-99, 1999-2000, 2001-02 & 2002-03. 4. Mr. Nitin Mehta, learned advocate appearing for the appellant contended that the Tribunal erred in observing that the total consideration paid by the assessee to acquire the running business of EMD undertaking was at market value because the AO has not doubted the genuineness of the total consideration paid amounting to Rs. 100 crores. He contended that the Tribunal erred in holding that the CIT(A) made no mistake in concluding that Explanation 3 to Section 43(1) of the Act was not applicable to the facts of the case. 5. H....

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....f acquisition by the assessee, the assets were at any time used by any other person for the purposes of his business or profession and the Assessing Officer is satisfied that the main purpose of the transfer of such assets, directly or indirectly to the assessee, was the reduction of a liability to incometax (by claiming depreciation with reference to an enhanced cost), the actual cost to the assessee shall be such an amount as the Assessing Officer may, with the previous approval of the Joint Commissioner, determine having regard to all the circumstances of the case.     9.1 Thus, Explanation-3 can be invoked if the Assessing Officer is satisfied that the main purpose of the transfer of assets, direct or indirectly to the a....

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.... cost of such asset.     14.2 It can be noticed that such explanation is brought on the statute book by the Finance Act, 1986, w.e.f 1st April 1974, which explains that where an amount is paid or is payable as interest in connection with acquisition of asset, so much of such amount which is relatable to any period after such asset is first put to use shall not be included and shall be deemed to have been included in the actual cost of such asset.     14.3 The Bombay High Court in case of Commissioner of Income-Tax v. Rajaram Bandekar, reported in 202 ITR 514 was considering Explanation 8 to Section 143 (1) of the Act wherein, it is held that the said explanation was added with an object of removing doubts wit....