TaxTMI 
TaxTMI 
2015 (9) TMI 892
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....ound which reads as under: "On facts & in the circumstances of the case and in law, the learned CIT(A) erred in: 1. Denying depreciation claimed by the assessee for the A.Y. 2007-08 Rs. 1,23,11,709/- on commercial rights acquired by it in the previous year relevant to the A.Y. 2005-06 under Intangible Assets. The CIT(A) further erred in denying depreciation as aforesaid when the depreciation claimed by the assessee from A.Y. 2005-06 was allowed to it in the preceding A.Y. 2005-06 and A.Y. 2006-07 on the said Intangible Asset in the assessments completed u/s. 143(3)." Since, the issues raised in the appeals are common. All the appeals are taken up together for adjudication. 3. The brief facts of the case are The assessee is a company registered under the Companies Act and is engaged in manufacturing and sale of insulated wires and cables, optic fiber cables, corrugated PVC, foam sheets, finance, trading in goods, leasing etc. The assessee in its return of income for the impugned assessment years had claimed deduction u/s. 80IB for its unit located at Goa. In the claim of deduction, the assessee had also included the value of scrap sale. The Assessing Officer held that income f....
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....R 803. The relevant extract of the order of Tribunal in ITA No. 105/PN/2007 is as under: "27. Ground no. 6 relates to CIT(A)'s direction to the A.O to allow the deduction u/s 80-IB of the Act in respect of scrap generated out of manufacturing process treating the same as business income. The A.O observed that the scrap is not a bye product of the assessee and hence the sale of the same cannot be treated as the business income of the unit and hence not eligi9ble for deduction u/s 80-IB of the Act. As regards the alternative ground of the assessee of taking net income earned out of the sale of scrap, the A.O. observed that the same is not acceptable as the cost relating to the sale of scrap was already debited to the P & L a/c of the unit. The A.O also did not grant deduction u/s 80-IB in respect of miscellaneous income amounting to Rs. 56,32,480/- relying on the judgments of Apex Court in the case of Pandian Chemicals (233 ITR 497) and Sterling Foods Ltd. (236 AITR 529). On appeal, the CIT(A) has confirmed the view taken by the A.O on this issue. 28. At the very outset, the Learned Counsel for the assessee has mentioned that the said issue is also covered in favour of the ass....
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....per gram. Subsequently, the prices of preforms crashed down in the world market. The assessee persuaded Shin Etsu to review and revise the agreed prices downwards to bring it in line with the world market price. An agreement for supply of preform at the revised rate was executed to be effective from 15-05-2003 (assessment year 2004-05). According to the said agreement the assessee agreed to pay lump sum amount of 285 million Japanese Yen for the unsupplied quantity under 200 kg and 400 kg agreement. The rate of preforms was revised from 70.5 Japanese Yen to 38 Japanese Yen. The assessee agreed to pay a lumpsum amount of 285 million Japanese Yen to protect its business interest and secure source of supply of critical raw material. Since, the lumpsum payment was made to secure advantage of enduring nature, the assessee treated the same as capital in nature. Accordingly, it was added in the block of assets and depreciation was claimed. In the assessment years 2004-05, 2005-06 and 2006-07, the Revenue accepted the claim of the assessee. The return for the assessment years 2004-05, 2005-06 and 2006-07 were processed u/s. 143(3). No objection whatsoever was raised by the Assessing Office....
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....ers of the authorities below. As far as the facts are concerned, the Revenue has not raised any dispute. The only point of contention is; Whether the assessee is eligible to claim depreciation on the payment of lumpsum amount paid by assessee to Shin Etsu for the supply of raw material (preform) at the reduced rate? It is an undisputed fact that the lumpsum payment of 285 million Japanese Yen was made by the assessee in the period relevant to assessment year 2004-05 and the assessee had capitalized the same in the very first year itself. The assessee had claimed depreciation on the said amount in the assessment years 2004-05, 2005-06 and 2006-07. The Revenue had accepted the claim of assessee in each of the said assessment years. In the impugned assessment year, the Assessing Officer disallowed the claim on the ground that no capital asset was acquired by the assessee. No intangible asset, like technical knowhow, had come into existence, therefore, the assessee cannot claim depreciation on the payments made to Shin Etsu. In the first appeal, the Commissioner of Income Tax (Appeals) rejected the claim of assessee with following observations: "14. I have carefully considered the fac....