TaxTMI 
TaxTMI 
2019 (9) TMI 623
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....s erroneous as the same is prejudicial to the interest of the revenue and consequently. Commissioner of Income Tax ought to have not passed Order dated 24-01-2014 under Section 263 of the Act. In view of the same, the Order dated 24-01-2014 passed by the Commissioner of Income Tax under Section 263 of the Act should be held as bad-in-law and hence, should be quashed / cancelled." 3. However, now during the hearing before us, the learned Counsel for the assessee drew our attention to additional ground raised, and according to the learned Counsel practically this ground is arising out of the main ground and is on merits of the case. For this, the learned Counsel for the assessee drew our attention to the additional ground which read as under: - "The Order dated 24.01.2014 passed by the Commissioner of Income Tax u/s 263 of the Act should be held as bad-in-law on account of the following and accordingly be quashed/ cancelled: (a) For claim of depreciation U/s. 32 of the Act, it is not necessary that the assets should be used throughout the previous year and in relation to block of assets, the identity of the individual assets is not there and accordingly, so long as block of a....
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.... the assessee's business transferred to the work-in- progress account till the asset was ready to be put to use, and once the asset is ready to be put to use, the said asset is transferred to the fixed asset account. During the current assessment year, the assessee claimed and have been allowed deduction of the capital expenditure amounting to Rs. 2,58,19,434/- which is pending for completion and was transferred to the fixed asset account. This has been done without making any enquiry prima facie warranted on facts and circumstances of the case." 5. The learned Counsel for the assessee argued that the first issue i.e. MAT credit is against the assessee and to that extent she agreed that the revision is within the framework of law. 6. The learned Counsel for the assessee, as regards to the second issue argued that the AO during the original course of assessment proceedings allowed the admissible depreciation under section 32 of the Act on assets for which impairment loan was provided during the year ended 31.03.2009. The learned Counsel for the assessee stated that once the asset is part of the block of asset and depreciation is granted on that block it cannot be denied as d....
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....ficer to re-compute depreciation after reducing the scrap value of the assets which have been discarded and written off in the books of account for the year under consideration from the written down value of the block of assets. Actual user of the machinery is not required with respect to discarded machinery and the condition for eligibility for depreciation that the machinery being used for the purpose of the business would mean that the discarded machinery is used for the purpose of the business in the earlier years for which depreciation has been allowed." 7. The learned Counsel for the assessee explained the fact that the "retired fixed assets" for which impairment loan has been provided for, related to the assessee company's one of the industrial undertaking situated at Dewas which were installed/constructed and put to use in the relevant year of installation and construction and continued to be used thereafter and the same were retired on account of restructuring of assessee company's organic chemicals activities including deploying some of the assets of it's Dewas unit in other projects currently under implementation. The assessee company had a business plan to....
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..... Once, it was found that the assets were used for business it was not necessary that all the items falling within the plant and machinery have to be used simultaneously for being entitled depreciation. In our view, the fixes assets forming part of the block of assets of the Dewas undertaking, the assessee is entitled for the claim. In the present case before us, the assets were acquired in prior years on which depreciation allowance under section 32 of the Act was allowed. The fixed assets forming part Dewas units were used during the year ended 31.03.2009 for the purpose of business and block of assets to which these assets utilized were used for the purpose of business. Therefore, we are of the view that the conditions depreciation allowance under section 32 of the Act were duly satisfied with respect to fixed assets forming part of Dewas Undertaking, though the same were retired as of the year end. Hence, we find that the AO has rightly allowed the claim of the assessee. In any case, there could be to two views possible and AO has taken one of the possible view on the issue. In view of the decision of Hon'ble Supreme Court in the case of 83 ITR 243 Malabar Industries, the revis....
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....adjustment on similar lines as done in Assessment Year 2007-2008. Based on the said working, the income was required to be reduced by Rs. 31,98,8791/-. However, the AO did not made any adjustment while assessing the income for said the assessment year. The assessee filed copy of letter dated 24.11.2010 submitted in the course of assessment proceedings in this regard. 14. Similarly, for Assessment Year 2009-2010, the AO did not accept the contention of the assessee company that no adjustment is required to be made U/s. 145A of the Act in assessing the income U/s. 143(3) of the Act and directed to work out the adjustment on similar lines as done in Assessment Year 2007-2008. Based on the said working, the income was required to be reduced by Rs. 1,32,86,625/-. The assessee filed copy of letter dated 15.11.2011 submitted in the course of assessment proceedings in this regard, which brings out the fact that the AO had not carried out any adjustment in assessing the income for the assessment year 2008-09. The AO, after examining the facts of the case, including the manner of adjustment carried out in the assessment year 2007-08 and to the fact that no adjustment was done in assessment....
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....ed the facts that the assessee company has an in-house Research & Development Unit at Rhestan, Surat, which has been accorded approval by the Government of India, Ministry of Science & Technolgy, Department of Scientific & Industrial Research, Technology Bhavan, New Delhi - 110016. The assessee had filed copy of the said approval letter in its paper book as Annexure 40. We noted that during the year, the assessee company has incurred expenditure on scientific research as under: - Sr. No. Particulars Amount in Amount in Deduction claimed 1. Revenue expenditure laid out or expended on scientific research related to the business of the assessee company 1,88,97,581/- 35(1)(i) 2 Capital expenditure incurred on scientific research related to the business of the assessee company a. Equipments installed and Building Capitalised 6,75,52,867/- 35(1)(iv) r.w.s 35(2) b. Equipment un-installed and Building in progress 2,58,19,534 9,33,72,401/- 35(1)(iv) r.w.s 35(2) Total 11,22,69,982/- 19. We noted that, the CIT in revision proceeding, required the assessee to justify as to why deduction under sectio....
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....tled to deduction even if the asset in question is not actually used, provided it has incurred capital expenditure during the previous year on scientific research. 21. In view of the above, we noted that for the purpose of claiming deduction of capital expenditure U/s. 35(1)(iv) read with Section 35(2) of the Act, what is necessary is incurrence of expenditure, which the assessee company has incurred and not the user of the asset during the previous year in which such expenditure is incurred. Further, the eligible year of claiming deduction is the year of incurrence of such expenditure. In view of above, it will be observed that as per Section 35(I)(iv) read with Section 35(2) of the Act, deduction for capital expenditure incurred is allowable under the said section, as under: "(i) Deduction under the provisions of Section 35 of the Act is given only during the previous year in which the expenditure is incurred; (ii) Accordingly, an assessee cannot be deprived off the benefit of deduction in respect of capital expenditure under the provisions of Section 35 of the Act if the asset is not used in the previous year in which the capital expenditure is incurred; (iii) Consequ....