TaxTMI 
TaxTMI 
2020 (4) TMI 740
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.... Baroda dated 01.08.2014 and ld.Commissioner Income Tax(Appeals)-I, Vadodara dated 31.05.2016 for the assessment years 2009-10, 10-11, 2010-11 and 09-10 respectively. Assessee's Appeal in ITA No.1501/Ahd/2014 for A.Y. 2009-10: 2. Grounds raised by the Assessee in ITA No.1501/AHD/2014 read as under: "1. The learned Commissioner of the Income Tax-I, Baroda ("the CIT") erred in fact and in law in revising the assessment by invoking powers u/s. 263 of the Income Tax Act, 1961 ("the Act") which was completed by way of assessment made u/s 143(3) despite the fact that the conditions stipulated for invoking such extraordinary jurisdiction were not satisfied. 2. The learned CIT erred in fact and in law in setting aside the assessment u/s. 143(3) and directing the Deputy Commissioner of Income Tax Circle-1(1), Baroda ("the AO") to frame fresh assessment on the issues already considered and decided during the proceedings u/s. 143(3) of the Act. 3. The learned CIT erred in fact and in law in observing that the assessment u/s. 143(3) was framed without proper enquiry and verification despite the fact that the AO had examined the issue at length and had called fo....
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....essee relates to challenging the order of ld.CIT in directing the ld.Assessing Officer (AO) to verify the claim of depreciation on an amount of Rs. 3,85,00,000/- being Foreign Exchange Fluctuation u/s.43A. Despite the fact that the said issue never formed part of showcause notice u/s.263(1) of the Act, and therefore direction on this issue is beyond the purview of section 263 of the Act. The ld.Authorised Representative(AR) in this respect relied upon the decision of Co-o0rdinate Bench of ITAT Ahmedabad in the case of Arsh Industrials & Investments Pvt. Ltd., vs ITO [1988] 32 TTJ 402 (Ahmedabad), Ultramarine & Pigments Limited Vs. ACIT, Range- 7(3), Mumbai in ITA No.2844/Mum/2013 for A.Y. 2009-10, CIT, Patiala Vs. Roadmaster Industries Lt.d, [2013] 40 taxmann.com 298 (Punjab & Haryana) and Damodar Velley Corporation Vs. DCIT [2016] 72 taxmann.com 127 (Kolkata - Tribunal). It was further submitted by the assessee that showcase notice issued u/s.263(1) of the Act is at page no.148 & 149 of the paper book and the said show-cause notice is restricted only to on account of two heads i.e. (i) Interest Payable on the loan received from Reliance Industries Limited, it was capitalized and w....
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....terest amount so claimed u/s 36(l)(iii) was required to be disallowed. Not doing this resulted into underassessment of Rs. 1,31,34,954/-. 2. It was noticed from the depreciation chart that the assessee had claimed depreciation @ 15% on WDV amount Rs. 5,60,65,380/- of electrical installation / fittings. The eligible rate of depreciation on electric installation / fittings as per Appendix-I was 10%. Thus there was an excess claim of depreciation @ 5% on electrical fittings as shown below; Depreciation claimed by the assessee @ 15% (including half the rate for period less than 180 days) 84,09,807 Depreciation eligible to the assessee @ 10% (including half the rate for period less than 180 days) 56,06,538 Excess depreciation allowed 28,03,269 The excess depreciation of Rs. 28,03,269/- claimed by the assessee was required to be disallowed. This being not done resulted in under assessment of income of Rs. 28,03,269/-. In view of the above, I am directed to give an opportunity of being heard and to show cause as to why the aforesaid assessment made by the Assessing Officer for the A.Y.2009-10, should not be enhanced or cancelled with a directio....
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....n reply dated 12.2.2013 is carefully considered. However, it is a fact thai the AO has not conducted any enquiry in respect of these items before allowing deduction u/s 10A. In view of this, after having considered the material on record and assessee's submissions, I am of the considered view that these items have been considered for exemption u/s 10A by the A.O. without conducting the enquiries which are prima-facie warranted on the facts and circumstances of this case. It is trite law that lack of enquiry results in error within the meaning of Sec.263 of the l.T. Act, 1961. It is a fact that considering profit of Rs. 1,15,91,571/ for computation of income u/s.1OA without enquiries has resulted in error within, the meaning of section 263 of the I.T. Act, 1961. This has also caused prejudice to the revenue inasmuchas it has resulted in granting exemption without enquiries warranted, on facts and circumstances of the case. Accordingly, the order the AO in respect of profit of Rs. 1,15,91,571 / - is also set aside to the file of the AO. 8. The AO is directed to examine issues which are subject matter of notice u/s.263 and conduct enquiries required on facts and ....
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....ice fire different arid the order passed by learned CIT u/s. 263 is based on another ground and therefore the assessee could not get opportunity to explain the point recorded at the time of passing the final order. Therefore, respectfully following the judgments which are based on the facts which are similar to the facts of the present case, we hold that the order passed by learned CIT u/s. 263 is bad in law and not sustainable in law. Therefore the same is quashed. 9. Even, otherwise on the merits of the case, the ld. CIT(A) has held that this "windmill" was not used in any manufacturing activity. Therefore as per CIT this does not qualify for additional depreciation. In this respect we are of the considered view that as per provision of section 32(l)(iia) which reads as under: "in the case of any new machinery or plant (other than ships an aircraft), which has been acquired and installed after 31st day of March, 2005, by an assessee engaged in the business of manufacture or production of any article or thing..". From the afore mentioned reading we find that the only requirement of section is that the assessee should be engaged in the business of manufac....
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.... facts of the present case, we hold that the order of ld.CIT u/s.263 qua directing the ld.AO to pass a fresh order denovo on account of claim of depreciation on account of Foreign Exchange Fluctuation is bad in law and is thus not sustainable in Law. Therefore, that portion of the order is quashed, and this ground no.7 raised by the assessee is allowed. 13. Since we have allowed Ground No.7 of this appeal filed by the assessee, therefore other grounds raised by the assessee become infructuous in view of our findings on ground no.7 as subsequently to the passing of order u/s.263 of the Act, the ld.AO had made additions which have already been deleted by the ld.CIT(A). 14. In the result, appeal of the assessee is allowed. Revenue Appeal in ITA No.2998/Ahd/2014 for A.Y. 2010-11: 15. Ground raised by Revenue read as under: (i) On the facts and in the circumstances of the case, the Id.CIT(Appeals) erred in deleting the addition/disallowance of Rs. 56/74,523/- out of total addition/disallowance made by the AO of Rs. 7~59,65,871/- on account of repairs to Plant & Machinery, being capital in nature, without appreciating the fact that the expenditure incurred had an end....
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....oss Block of assessee is about Rs. 85,918.32 lakhs as against the repair expenditure to plant and machinery of Rs. 73.42 lakhs which is quite miniscule. The Ld.AR thereafter submitted that similar disallowances were made by the Revenue in AY 2004-05 and 2006-07 which were reversed by the Tribunal in ITA Nos.3077 & 3079/Ahd/2011 for AYs 2004-05 & 2006-07 order dated 13/11/2017. 5. The Ld.DR relied upon the order of the AO and submitted that the expenses incurred has increased the endurance value of the plant & machinery. 6. We have carefully considered the rival submissions together with the orders of the authorities below. We notice that the repair expenditure of the aforesaid amount have been treated as capital expenditure by the CIT(A) on the ground that such expenditure includes mainly expenses on fabrication/erection/dismantling. The AO had on the other hand held that such expenditure carries endurance value and therefore capital expenditure. We do not find any reason to agree with either of the contentions of the Revenue authorities. Having regard to the nature of work that the assessee is engaged in and having regard to the staggering value of plant & machin....
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....d 3122/Ahd/2011 for A.Y's 2004-08 and 2008-09 respectively in which para no.19 reproduced as below: "19. With the assistance of the Ld.DR for the Revenue and ld.AR for the assessee, we observe that the claim of the assessee which in essence represents write off of unusable stores and spares deserves to be allowed on first principle. However, in the same vain, we do not find any reference to the details filed before the AO in this regard towards mythology of identifying unusable stores and spares and segregating them for write off purposes. The AO not given any finding on the bonafides and correctness of such treatment. Thus, while the loss if any arising on write off of stores and spares in the given set of circumstances ordinarily are admissible expenditure, the factual aspects requires to be examined. Therefore, we consider it expedient to restore the issue back to the file of the AO for examination of the issue de novo in accordance with law. The AO, while doing so, shall be entitled to verify the process for identification of the source and spares which are subjected to write off/diminution. Needless to say, a reasonable opportunity shall be granted to the ass....
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....tallation to 10% instead of 15% as claimed by the respondent and thereby confirming the addition of Rs. 28,03,269/- to the income of the respondent. 2. The learned CIT(A) erred in fact and in law in conforming the action of the AO in restricting the depreciation on electrical installation to 10% instead of 15% despite the fact that the electrical installation is an integral part of plant and machinery. 3. The learned CIT(A) erred in fact and in law in confirming the action of AO in disallowing depreciation of Rs. 28,94,339 on foreign exchange loss arising from reinstatement of creditors for fixed assets. 4. Without prejudice to the above, the learned CIT(A) erred in fact and in law in not allowing the foreign exchange loss as revenue expenditure despite holding that the same does not form part of the cost of the fixed asset. 5. The learned CIT(A) erred in fact and in law in confirming the action of the AO in charging interest u/s. 234B of the act. 6. The learned CIT(A) erred in fact and in law in confirming the action of the AO in charging interest u/s.234C of the act. 7. The learned CIT(A) erred in fact and in law in confirming....