TaxTMI 
TaxTMI 
2016 (3) TMI 120
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....proceed with the facts for A.Y. 2004-05. 2. The relevant facts as culled out from the materials on record are as under: 3. The Assessee is a Company stated to be engaged in the business of providing pollution control treatment for disposal of liquid and solid industrial waste. The Assessee filed its return of income for A.Y. 04-05 on 30.10.2004 declaring total income at Rs. 2,99,450/-. The return was initially processed on 25.10.2005. Subsequently, notice u/s.148 was issued on 01.06.2007 and served on assessee on 29.06.2007 and thereafter, the assessment was framed u/s.143(3) r.w.s. 147 of the Act vide order dated 31.07.2008 and the total income was determined at Rs. 27,76,763/-before setting off of unabsorbed forward losses. Aggrieved by the order of Assessing Officer, Assessee carried the matter before the ld. CIT(A) who vide order dated 21.09.2010 dismissed the appeal of the assessee. Aggrieved by the order of ld. CIT(A), Assessee is now in appeal before us and has raised the grounds which were later concised and the concised grounds read as under: "1. General 2. Ld. CIT (A) erred in law and on fuels in holding the reopening of assessment made by AO u/s 1....
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....t after reducing the subsidy from the cost of asset. He was therefore of the view that the claim of depreciation should have been on the cost reduced by subsidy and not on the original cost. He, therefore, worked out the excess depreciation claimed by assessee on account of subsidy at Rs. 18,19,520/- and disallowed the same. 5.2 Aggrieved by the order of Assessing Officer, assessee carried the matter before the ld. CIT(A) who upheld the order of Assessing Officer by holding as under: "4.2 Briefly stated the contentions of the appellant are that the subsidy of Rs. 72.78 lakhs was received in the previous years relevant to A.Ys. 1999-2000 and 2000-01; no subsidy is received during the year under consideration; and therefore no disallowance of depreciation is called for. "4.2.1. While making the disallowance A.O. relied on the case of Saharangpur Electric Supply Co. Ltd. & ORS vs. CIT (194 ITR 294) (SC), in which it was held that the actual cost of all assets, including those acquired in earlier years, is to be determined in each A.Y. and that the A.O. has to ensure that the depreciation allowed is not more than the actual cost. In the instant case, it is not the ....
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....as contained in Section 43(6) in the case of block of assets means the opening Written Down Value as increased or decreased by the two circumstances, namely, increase in the block of assets on account of acquisition of new asset, provided such asset is put to be used in the year under consideration; and decrease in case where the asset is sold or otherwise disposed of in the previous year. He further submitted that the Section does not permit any other adjustment to be made from the Written Down Value and the concept of actual cost has bearing only in year one in which the assets are acquired. He further submitted that when once the asset enters the block, it loses its independent identity and the cost of such assets gets merged with other assets in the block and once the assets forms part of the block, the depreciation is computed on the written down value on the block of assets as envisaged in Section 43(6)(c) of the Act and Section 43(6)(c) does not permit reducing the written down value of the block of assets by the amount of subsidy received in relation to some of the assets forming part of the block of assets and therefore, the cost of assets cannot be reduced out of the writ....
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....n the written down value of the block of assets. In relation to block of assets, it is not possible to segregate items falling within the block for the purposes of granting depreciation or restricting the claim thereof. The subsidy of Rs. 25,00,000/- in relation to the assets in question came to be released in the year under consideration, by which time Explanation 10 to section 43(1) came to be inserted in the statute book, and accordingly, the Assessing Officer held that the cost of assets is required to be reduced out of the written down value of their respective blocks to the extent of Rs. 25,00,000/-. 9. At this juncture, it may be noted that the expression "actual cost" envisages the actual cost of asset as reduced by any amount received directly or indirectly from any person or authority and Explanation 10 to section 43 (1) of the Act, clearly provides that where a portion of the cost of an asset acquired by the assessee had been met directly or indirectly by the Central Government or a State Government or any authority established under any law or by any person, in the form of a subsidy, then, so much of the cost as is relatable to such subsidy, shall not be includ....
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....e any other category for computing the written down value of a block of assets. Therefore, section 43(6)(c) of the Act does not permit reducing the written down value of the block of assets by the amount of subsidy received in relation to some of the assets forming part of the block of assets. Consequently, the costs of assets cannot be reduced out of the written down value of their respective blocks to the extent of Rs. 25,00,000/-as the statute does not envisage any manner of doing so. When the Assessing Officer reduces the cost of assets out of the written down value of the block of assets, he is reducing not only the cost of assets in relation to which the subsidy is granted, but the cost of all assets forming part of the block, irrespective of whether any subsidy was granted in respect of such assets. Under the circumstances, when the statute does not contemplate computation of actual cost of asset after it becomes part of a block of assets, Explanation 10 to subsection (1) of section 43 of the Act cannot be made applicable to assets of which the actual cost has been determined much before the insertion thereof and which also form part of a block of assets. Therefore, when it ....
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....provision needs to be added to the net profit shown in the P&L account for working out u/s.115JB. He accordingly added it to the income. 6.2 Aggrieved by the order of Assessing Officer, assessee carried the matter before the ld. CIT(A) who upheld the action of Assessing Officer by holding as under: "5.2. I have considered the submissions made by the A. R,. of the appellant and the observations of the assessing officer in the assessment order. The first contention of the appellant is that the issue of computation of book-profits u/s. 115JB is not part of the reasons recorded for reopening and therefore A.O. could not disturb the book-profits. In this regard it is seen that Expln. 3 below Sec. 147, inserted by the F. A. (No.2) of 2009 w.r.e.f. 1.4.1989 expressly empowers the A.O. to travel beyond the reasons recorded for reopening. In the case of Pioneer Overseas Corporation vs. DCIT 131 TTJ 409 (Del.) this view was upheld. Therefore, this contention of the appellant has to fail. 5.2.1. The next contention of the appellant is that as on the date of passing of assessment order Expln. 1 (i) below Sec. 115JB was riot on the statute and therefore the provision for ba....
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.... Ld. A.R. on the other hand cited the decision of High Court of Karnataka in the case of CIT vs. Yokogwa India Ltd. (2012) 17 Taxmann Com.15 (Kar.) (IT Appeal No.1062 of 2008) of August 29, 2011. In this case the question before the Hon'ble High Court was as under:- "Whether the Appellate Authorities were correct in holding that the provisions made for bad and doubtful debts cannot be added back in accordance with the Explanation (c) to Section 115JB(1) of the Act as the same is not an ascertained liability when computing the book profits under Section 115JB of the Act?" 10. The Hon'ble High Court held as under:- "8. In the present case, the debt is an amount received by the assessee and, therefore, any provision made towards recoverability of the debt cannot be said to be a provision for liability. Therefore it was held that Item (c) of the Explanation is not attracted to the facts of the case. Item (c) in Section 115JA and 115-JB(1) are identical. In order to attract the Explanation the debt which is doubtful or bad should satisfy the requirement contemplated in Item (c) of the Explana....
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....the Explanation the assessee is now required not only to debit the profit and loss account but simultaneously also reduce the loans and advances or the debtors from the assets side of the balance sheet to the extent of the corresponding amount so that, at the end of the year, the amount of loans and advances/debtors is shown as net of the provisions for the Impugned bad debt. Therefore, in the first place if the bad debt or doubtful debt is reduced from the loans and advances or the debtors from the assets aside of the balance sheet, the Explanation to Section 115JA or JB is not at all attracted. In that context even if amendment which is made retrospective the benefit given by the Tribunal and the appellate Commissioner to the assessee is in no way affected. In that view of the matter, we do not see any merit in this appeal." 11. We have considered the rival contentions, the case laws cited and perused the documents on record. It is an a fact that the assessee had made provision for bad and doubtful debts and the same has been charged to the Profit and loss account for the year ended 31st March 2003. In the Balance sheet as on 31st March 20023 of the assessee, it can be s....
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....edings and issuance of notice u/s. 148 are ab-initio void and consequently the assessment order passed pursuant to such notice u/s. 148 is also null and void before the eyes of law. The impugned assessment order therefore please be cancelled. 3. The learned CIT (A) grossly erred in law and on facts of the case in confirming the action of the AO in disallowing the assessee's claim for depreciation by capriciously recomputing the WDV of the block of depreciable assets at Rs. Nil. 4. The learned CIT (A) grossly erred in law and on facts of the case in confirming the action of the AO in disallowing the assessee's claim for depreciation by capriciously deducting an amount of Rs. 8,04,93,623/-being contributions received from the members in earlier years prior to the assessment year under appeal in utter disregard to the fact that the predecessor Assessing Officer in the scrutiny assessment made for A.Y. 2004-05 had correctly worked out the depreciation and the written down value of the depreciable assets for A.Y. 2004-05. The learned AO ought to have adopted the WDV of the depreciable assets on the basis of the assessment order for A.Y. 2004-05. ....
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....f the case in not appreciating the appellant's contentions in the course of appellate proceedings that the income of the appellant from the operation of common effluent treatment plant and trans-boundary transportation of solid wastes is not taxable on principle of mutuality as the receipts are from the members only. It is therefore prayed that the income of the appellant may be please held as not taxable on principle of mutuality." 9. Ld. A.R. at the outset submitted that first ground is general and needs not be adjudicated. We therefore dismiss the ground of assessee. 10. Ground no.2 is with respect to reopening. Ld. A.R. did not wish to press this ground and therefore, the same is dismissed as not pressed. 11. Ld. A.R. submitted that ground nos. 3 to 8 are identical to the ground no.2.2 raised in A.Y. 2004-05 hereinabove and which was not controverted by ld. D.R. 11.1 We have heard the rival submissions and perused the material on record. In view of the submissions of both parties that the facts of the case in the present grounds are identical to that of ground no2.2 for A.Y. 2004-05 which has been decided hereinabove by us. We therefore for similar reas....
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....wers to entertain a new claim for the first time though not made before AO and for this proposition he relied on the decision of Hon'ble Gujarat High Court in the case of CIT vs. Mitesh Impex reported in (2014) 46 Taxmann.com 30 (Guj). He also placed on record copy of the same. He however submitted that since Assessing Officer has summarily rejected the claim of assessee without examining the issue the matter be restored to the file of Assessing Officer for deciding the claim of assessee. Ld. D.R. supported the orders of Assessing Officer and ld. CIT(A). 12.4 We have heard the rival submissions and perused the material on record. We find that ld. CIT(A) after relying upon the decision of Hon'ble Apex Court in the case of Goetez (India) Ltd., vs CIT reported at 284 ITR 323 upheld the order of Assessing Officer. We find that Hon'ble Gujarat High Court in case of CIT vs. Mitesh Impex reported in (2014) 46 taxmann.com 30 (Gujarat) has held that if a claim though available in law is not made either inadvertently or on account of erroneous belief of complex legal position, such claim cannot be shut out for all times to come, merely because it is raised for the first time before the ap....