TaxTMI 
TaxTMI 
2019 (5) TMI 540
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..../-. 2. The CIT(A) has erred in law and in facts in deleting the disallowance made on additional depreciation of Rs. 1,53,74,316/-. 3. The CIT(A) has erred in law and in facts in deleting the addition made on account of unutilized CENVAT Credit of Rs. 23,64,484/-. On the fact and in the circumstances of the case and in law, the CIT(A) ought to have upheld the order of the Assessing Officer to the extent' mentioned above since the assessee has failed to disclose his true income/book profit. The appellant prays that the order of CIT(A) on the above grounds be set aside and that of the Assessing Officer be restored to the above extent. The appellant craves, to leave, to amend or alter any ground or add a new ground which may be necessary." Ground No.1 3. This ground relates to the order passed by the Learned CIT(A) in deleting the disallowance made u/s 40(a)(i) in respect of consultancy and supervision charges of Rs. 71,43,952/- 4. The assessee filed its return of income on 26.09.2011 declaring total income of Rs. 2,35,39,500/- which was processed u/s 143(1) of the Act. Under scrutiny, notice dated 18.09.2012 u/s 143(2) was served upon t....
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....he outset, we note that the issue raised is identical to the issue raised by the Revenue in ITA 539/Ahd/2018 which we have decided against the Revenue and in favor of the assessee vide Paragraph No. 14 of this order. Therefore respectfully following the same we do not find any reason to disturb the finding of the learned CIT-A. Hence the ground of Revenue's appeal is dismissed." We find no reason to deviate from decision taken by the Co-ordinate Bench as narrated above and respectfully relying upon the same we confirm the order passed by the authorities below. The revenue's appeal is found to be devoid of any merit and thus dismissed. Ground No.2 7. The second ground relates to deletion of disallowance of additional depreciation of Rs. 1,53,74,316/-. 8. The assessee-company had purchased plant and machinery of Rs. 153,743,158/- on which additional depreciation of Rs. 1,53,74,316/- (less than 180 days) has been claimed. The entire plant and machinery was on lease and accordingly rental income of Rs. 5,77,44,000/- was shown by the assessee. By and under a letter dated 26.12.2013, the assessee was directed to explain as to why said additional depreciation shoul....
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....ble for the additional depreciation. 23. The assets have been used in the business of leasing the assets of the assessee. Accordingly, the assessee is eligible for additional depreciation. 24. However, AO disregarded the contention of the assessee by holding that the assets were used in the business of leasing and not in the business of manufacture. Thus the assessee is not entitled to the additional depreciation. 24.1 Thus the AO after having a reliance on the judgment of Hon'ble Gujrat high court in case of Bhagwati Appliances vs. ITO (337 ITR 286) added Rs. 85,75,341/- to the total income of the assessee. 25. Aggrieved assessee preferred an appeal to ld. CIT-A, who deleted the addition made by the AO following the co-ordinate bench order in the case of Heavy Metal and tubes Ltd in ITA no. 1951/A/2011. The ld. CIT-A also relied on the judgment of Hon'ble Gujarat High court in the case of Diamines & Chemicals Ltd reported 42 Taxman.com 193 where depreciation was allowed by holding that there is no requirement of correlation between the assets acquired and manufacturing activity. 26. The learned DR before us vehemently supported the orde....
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....uld have been acquired and installed by an assessee, who was already engaged in the business of manufacture or production of any article or thing. Considering the aforesaid facts and circumstances and considering the relevant provisions of Section 32(1)(iia) of the Income-tax Act, which was prevailing at the relevant time, i.e. during the year under consideration, it cannot be said that the ITAT by applying the ratio of decision of the Madras High Court in the case of VTM Ltd. (Supra) and in the case of Hi Tech Arai Ltd. (Supra) has committed any error in deleting the addition of Rs. 1,17,98,030/- on account of disallowance of additional depreciation of Wind Electric Generator. 3. We see no reason to interfere with the impugned judgment and order passed by the ITAT. No question of law, much less substantial question of law arises in the present Tax Appeal. Hence, the present Tax Appeal deserves to be dismissed and is accordingly dismissed." 27.3 We also find support and guidance from the order of this tribunal in the case of Heavy Metal and tubes Ltd (supra) wherein it was held as under: "7. We have heard the rival submissions and perused the material on ....
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....aling to Rs. 23,64,484/-. If further revealed that the appellant has been following exclusive method for accounting CENVAT as against inclusive method mandated under section 145A of the Act, the specific quarry, therefore, was raised by the Learned AO. However, the explanation rendered by the assessee was not found suitable and Learned AO made addition of the said amount being utilized CENVAT to the total income of the assessee. During the appellate proceeding, the appellant submitted as follows before the first appellant authority: "6.2 Appellant during the course of appellate proceedings, contended as under: 3] The ld.AO was completely in error on facts and in law in making an impugned addition for the alleged unutilized Cenvat Credits of Rs. 23,64,484/- by not appreciating the submission made by the Appellant in reply dt.06.01.14 vide para-1 in right perspective which was although reproduced in the assessment order but however, the ld. AO completely failed to controvert / counter the said submission with justifiable reason in support for such impugned addition made. Instead, the ld. AO went on to discuss theoretically and academically to thrust the point to jus....
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....tax liability portion) - 23,61,721 To Cenvat payable Account - 23,61,721 Utilization of Cenvat receivable amount against output tax liability: Cenvat payable Account Dr. - 23,61,721 To Cenvat receivable Account - 23,61,721 Now, the accounting as drawn and explained above means that only the Cenvat credit (totaling to Rs. 47,26,205/-) which has actually been utilized to the extent for output tax liability (arising out of Sales to the tune of Rs. 23,61,721/-) and the remainder of Cenvat which has been actually availed but not utilized were shown as carried forward balance of Loans and Advances in the Balance Sheet as on 31/03/2011. Further, the Appellant would like to reiterate the fact that the provisions of Section 145A of the Income Tax Act, 1961 cannot be linked with the accounting precedence. Since, the Appellant has to draw your kind attention to the fact that the statement No. 12 stating particulars in Form 3CD for clause 22(a) gives the reconciliation effect on profitability by following inclusive method and giving the effect of Cenvat taxes by following the said principles, which cannot be coincided with the accounting methodology for refundable taxes. ....
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....it so available is accounted for in the books which is debited when credit is available/availed of and credited when excise duty liability is paid off utilizing the balance available in this regard. On examination of profit and loss account it is found that the appellant has not claimed this expenditure in Profit and Loss account and therefore appellant has opted for exclusive method so to say purchase and sale are debited/credited without the amount of VAT. The result of which either debit or credit is considered as a balance sheet item. This method is consistently followed by the appellant this is admitted position of fact that the amount of VAT paid by appellant is not included in cost of purchase and the same was not debited in P & L account. Further u/s 145A in determining the profit the cost of inventory should comprise all cost of purchase, cost of conversion, and other cost incurred in bringing inventories to their present location and condition. The section further provide that the cost of purchase consist of purchase price including duties and taxes(other than those subsequently recoverable from the taxing authorities) even in such case duties and taxes can only ....
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....tions under both the statutes and in the facts of the present case, even on application of the general principles, the addition sought to be made by Revenue cannot be sustained. Further, it is held that making of an entry or absence of an entry cannot determine rights and liabilities of parties. In other words, Hon'ble High Court held that if the law does not lead to incurring of a liability, or does not lead to a corresponding right to insist for discharging such a liability any accounting practice (even if suggested by the ICAI) cannot lay down anything to the contrary. Hon'ble High Court has discussed the provisions of Section 145A which has been inserted by Finance (No.2) Act, 1998 w.e.f. 1 st April, 1999. Hon'ble High Court considered that though the Bill proposed retrospective insertion ultimately the section has come on the statute book only from 1st April, 1999 but what is more material is that the same relates to inclusion in the value of inventory the amount of any tax, duty etc. paid or liability incurred for the same under any law in force. Meaning thereby such tax, duty, etc. should have been actually paid or should be actually due and payable under the law....
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....on the above grounds be set aside and that of the Assessing Officer be restored to the above extent. The appellant craves, to leave, to amend or alter any ground or add a new ground which may be necessary." Ground No.1 16. This ground of appeal relates to the order passed by the Learned CIT(A) in deleting the disallowance u/s 40(a)(ia) in respect of consultancy and supervision charges of Rs. 81,55,045/-. 17. The issue involved in this ground of appeal is identical to that of the issue already been dealt with by us in ITA No.1247/Ahd/2016 for A.Y. 2011- 12 and in the absence of any changed circumstances the same shall apply mutatis mutandis. Hence, this ground of appeal preferred by the revenue is also dismissed. Ground No.2 18. In this ground of appeal revenue has challenged the order passed by the Learned CIT(A) in deleting the addition made on account of unutilized CENVAT credit of Rs. 7,18,178/-. 19. The issue involved in this ground of appeal is identical to that of the issue already been dealt with by us in ITA No.1247/Ahd/2016 for A.Y. 2011- 12 and in the absence of any changed circumstances the same shall apply mutatis mutandis. Hence, this ground of appeal....