TaxTMI 
TaxTMI 
2018 (10) TMI 131
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....61 (hereinafter 'the Act'). 2. The only issue in this appeal of Revenue is against the order of CIT(A) directing the AO to allow depreciation on plant and machinery without reducing the compensation received. For this Revenue has raised the following ground No. 1: - "1. On the facts and in the circumstances of the case and in law, the ld CIT(A) erred in directing to allow the depreciation on plant and machinery without reducing the amount of compensation received by the assessee in AY 1999-2000 of Rs. 16,05,29,977/- (being initial year), whereas the compensation received by the assessee was in the nature of capital receipts and liable to be deducted from the WDV of plant & machinery for charging depreciation as per Income Tax Act/ Rule a....
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....nd in this year he disallowed by observing in para 6 as under: - "6. The brief facts of the case are that relevant to AY 1999-2000, the assessee received a compensation of DM7 Million from the suppliers of the plant and machinery being the Axial Closed Die Rolling Line upon settlement of disputes in supply, performance, erection and commissioning of the said plant and machineries. Out of this amount, it was held in the assessment year 1999-2000 that a sum of Rs. 16,05,29,977/- received on capital account went to reduce the cost of the plant. Accordingly, WDV of the plant and the machineries as at 31.03.1999 was reduced by this amount and lower depreciation allowed accordingly. The assessee challenged the assessment order in appeal before ....
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....ery. The A.0 has been holding that the said compensation was on capital account and hence, the same was required to be reduced from the WDV of plant and machinery. However, my learned predecessor CIT(A) has given a finding of facts on this issue and held that the WDV of plant cannot be reduced by the amount of said compensation because the said compensation was not paid in lieu of the plant and machinery. The learned CIT(A) had held that the said compensation was merely paid because the plant and machinery supplied earlier was defective in nature and the said amount was paid to compensate the appellant for the losses incurred due to the said defective plant. As a result, in all the earlier appeals, the matter has been decided in favour of t....
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....ed. Sd sd (PS) ....