TaxTMI 
TaxTMI 
2019 (2) TMI 332
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.... Rs. 1,11,43,571/- u/s 145A. 2. The Ld CIT(A) has erred in law and on facts in deleting the addition of Rs. 18,86,570/- made by AO towards provision for warranty. 3. The Ld CIT(A) has further erred in law and on facts in allowing claim of excess depreciation @5% on certain vehicles acquired by the assessee during the F.Y. 2009-10 instead of usual rate of 155. 4. The department craves leave to add or alter any further grounds of appeal before or during the course of hearing." 3. The first issue raised by the Revenue is that Learned CIT(A) erred in deleting the addition made by the AO for Rs. 1,11,43,571/- u/s 145A of the Act. 4. Briefly stated facts are that the assessee is an individual and engaged in the business of manufacturing of paper converting machine and reselling of parts. The assessee in its balance sheet as on 31.03.2012 has shown excisable closing stock of the following items: Sr. No. Particulars Amount 1. Raw Material 5,95,39,950/- 2. Finished Goods 10,81,125/- The assessee while valuing the closing stock as discussed above has not included the amount of excise and VAT amounting to Rs. 1,11,43,571/- only. T....
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....e in favour of the assessee by keeping reliance on the decision of Hon'ble Jurisdictional High Court rendered in the case of ACIT vs. Narmada Chematur Petrochemicals Ltd. (2010) 327 ITR 369 (Guj.) In view of above facts and legal findings, we consider that ld. CIT(A) has correctly deleted the addition in favour of assessee. Revenue's appeal on this issue is rejected." We also find it important to refer to the judgment of Hon'ble Jurisdictional High Court in the case of ACIT Vs. Narmada Chematur Petrochemicals Ltd. reported in 327 ITR 369 wherein it was held as under: "There is one more aspect of the matter. Such duty of central excise if added to enhance the value of closing stock would result in enhanced opening stock on the first day of the next accounting period, namely, 1- 4-1997. So, next year's profits would get depressed accordingly. Over a period of time, the whole exercise results in evening out; in other words, revenue neutral. At the same time, while disturbing the value of the closing stock the assessing authority cannot change the method of accounting regularly employed." 7.1 As the facts in the case on hand are identical to the facts as discussed in....
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....d DR before us vehemently supported the order of AO whereas the Learned AR before us submitted that the similar provisions were made in the A.Y. 2014-15 which was allowed by the Revenue. 11.1 Ld AR further submitted that the actual expenses incurred against such warranty expenses exceed the amount of the provision created in the books of accounts. The Ld AR in support of his claim filed the copy of the ledger of warranty replacing the expenses which is placed on record. The Ld AR vehemently supported the order of Ld CIT(A). 12. We have heard the rival contentions and perused the materials available on record. It is a settled principle of law that the provisions created by the assessee on the scientific basis are liable for deduction u/s 37(1) of the Act. In this regard, we find support and guidance from the judgments of Hon'ble Supreme Court in the case of Rotork Controls India Pvt. Ltd. vs. CIT reported in 314 ITR 62 wherein it was held as under: "From analysis of the various decision of the Supreme Court, in which a similar issue was decided, the principle which emerges is that if the historical trend indicates that a large number of sophisticated goods were being ....
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....2 also made similar disallowance. Accordingly, the AO worked out the excess depreciation claimed by the assessee amounting to Rs. 3,74,917/- and disallowed the same by adding to the total income of the assessee. 15. Aggrieved, assessee preferred an appeal to Learned CIT(A) who has deleted the addition made by the AO by observing as under: "8.2 I have considered the assessment order and the submissions made by the appellant. The AO has made the disallowance on account of depreciation amounting to Rs. 3,47,917/-since while the appellant had claimed vehicles as commercial vehicles and accordingly depreciation at 50%, the AO held that the vehicles were not commercial vehicles and therefore depreciation was allowable only at 15% . It is seen that the exact issue was the subject matter of appeal in Asst. Years 2010-11 & 2011-12 as well wherein after a detailed discussion on the definition of commercial vehicles and light motor vehicle, as defined under the Motor Vehicles Act, 1988, decided the issue in favour of the appellant. Since the vehicles under question are the same on which.depreciation has been allowed @ 50% and relying on the judgement of the Hon'ble ITAT in the....
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....ch or a Motor Car or a Tractor or road roller, theunladen weight of any of which does not exceed 7500 Kg." The appellant has further submitted that as per theRC Book, the vehicle is LMV and the weight of the car is 2074 Kg. and the unladen weight is 1454 Kg. which was less than 7500Kg. Therefore, the appellant has claimed that the car purchased was acommercial vehicle and appellant was entitled to depreciation at higher rate. After considering the submission of the appellant and the facts, I aminclined to accept the submission made by the appellant. The Clause VI-A of the Appendix i.e. the table of rates of which depreciation is admissible prescribes the depreciation @ 50% for new commercial vehicle which is acquired on or after 01/01/2009 but before 01/04/2009 and is put to use before 01/04/2009 for the purposeof business orprofession. Further paragraph 6 of the note belowthe table defines commercial vehicles which includes Light Motor Vehicles as per the Motor Vehicle Acts, the specifications for which are reproduced in thepreceding paragraph. Therefore, it is clear that the appellant is entitled for depreciation @ 50% which was given as an incentive for a short....
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....so in subsequent A.Y. (A.Y. 2014-15) i.e. Rs. 1,22,89,760/- on actual basis, which is not permissible. 4. The department craves leave to add or alter any further grounds of appeal before or during the course of hearing." 18. The first issue raised by the Revenue is that Learned CIT(A) erred in deleting the addition made by the AO for Rs. 1,79,53,006/- u/s 145A of the Act. 19. The issue involved in this ground of appeal of the revenue is identical to the issue raised by the Revenue in ITA No.1735/Ahd/2016 which has been decided against the revenue and in favor of the assessee by us vide paragraph no. 7 of this order. Thus respectfully following the same we do not find any reason to interfere in the order of Learned CIT(A). Hence the ground of appeal of the Revenue is dismissed. 20. The second issue raised by the Revenue in this appeal is that Learned CIT(A) erred in deleting the addition made by the AO for Rs. 37,65,840/- on account of provision for warranty replacing expenses. 21. The issue involved in this ground of appeal of the revenue is identical to the issue raised by the Revenue in ITA No.1735/Ahd/2016 which has been decided against the revenue and in fa....