2018 (9) TMI 1791

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....) The ld CIT(A) has upheld the disallowances of the Depreciation made U/s 153A without any search material found in the courses of search by the AO which is not permissible in the law. ii) The ld CIT(A) has ignored the fact that the Excise Refunds used for the development of the backward area by New Industries as per Industrial Policy of Government of India for North East state is not a part of government grants. iii) The ld CIT(A) has ignored the fact that the assessee has complied with the recommendations of ICAI for recording such Excise Refunds in books of accounts and has complied with the Accounting Standard on "Deferred Government Grant" 2) That on the facts and circumstances of the case, the Ld. CIT(A) has grossly erred in uph....

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....ue authorities below in the light of the facts and circumstances of the case. 5. Assessee while moving an application sought to raise the following additional grounds :- "(i) That even otherwise, on facts and circumstances of the case, the appellant is entitled to claim benefit of statutory deduction u/s 80IC on additional income arising from disallowance of claim of depreciation. (ii) That in view of CBDT Circular No. 37/2016 dated 02.11.2016, the benefit of deduction u/s 801C is admissible on profits enhanced by the disallowance made u/s 32 and as such claim of depreciation is revenue neutral." Since the additional grounds sought to be raised by the assessee are legal grounds which go to the roots of the case and necessary for compl....

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....ciation. 9. On the other hand, ld. DR also by relying upon Explanation 7 & 10 to section 43 (1) contended that the actual cost of resulting company shall also be nil and as such, actual cost of asset is to be reduced by the amount of Rs. 78,32,12,592/-. The ld. DR further contended that the excise duty is reimbursement to the assessee. 10. In the backdrop of the aforesaid facts and circumstances of the case and arguments addressed by the ld. AR of the parties to the appeal, the first question arises for determination in this case is:- "as to whether the assessee is entitled to claim benefit of statutory deduction u/s 80IC of the Act on additional income arising from disallowance of claim of depreciation and that the benefit of deduction....

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....ibunals may be withdrawn / not pressed upon. The above may be brought to the notice of all concerned." 12. Bare perusal of the operative part of the Circular (supra) goes to prove that disallowance made by the assessee u/s 32 of the Act relating to business activity against which deductions have been claimed under Chapter VI-A, as in the instant case, results in enhancement of the profits of the eligible business and that deduction under Chapter VI-A is admissible on profits so enhanced by the disallowance. In these circumstances, the claim of depreciation made by the assessee company of Rs. 6,40,38,391/- is allowable deduction and as such, the benefit of deduction u/s 80IC is allowable on profits enhanced by the disallowance made u/s 32 o....