TaxTMI 
TaxTMI 
2021 (6) TMI 877
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.... was framed u/s 143(3) of the Income Tax Act, 1961 (hereinafter called 'the Act') on 22nd December 2006 assessing total income of the assessee at Rs. 40,67,51,498/-. Being aggrieved, the assessee filed an appeal before Ld. CIT (A). The Ld. first appellate authority, vide order dated 30th December 2008, allowed part relief. Assessee filed a further appeal before this Tribunal (ITAT). A coordinate Bench, vide order dated 25th February 2011 in ITA No. 1174/DEL/2009, set aside the matter with the following directions: "5. We have duly considered the rival contentions and gone through the record carefully. No doubt, audited accounts for this assessment year as well as earlier assessment years are relevant material for determining the true income of the assessee. In the absence of such accounts, it is difficult to determine the taxable income of the assessee. Assessing Officer has made a major disallowance in respect of depreciation claim because of this anomaly. It is also true that auditor of the assessee has to be appointed by learned CAG but to our mind, assessee should have persuaded the learned CAG to get the auditor appointed in time. If we look into the negligence at the....
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....hallenged this action on the ground that claim of depreciation on old assets has been consistently allowed in the past at Appellate stages and thus should be allowed this year also. Some of the submissions may be extracted : That Uttaranchal Jal Vidyut Nigam Ltd. (UJVNL) was incorporated on 12-2-2001 by Government of Uttaranchal for management of running generating stations, development and construction of new hydropower projects in the State of Uttaranchal. The Central Government vide its order dated 5-11- 2001 transferred all hydro power plants located in the State of Uttaranchal to UJVNL. Although the company took the financial & administrative control of the plants immediately thereafter with effect from 9-11-2001, the Transfer Scheme for transfer of values of assets & liabilities has not been finalized. In absence of any transfer scheme, Nigam has derived its provisional opening balances, on the basis of information available with it received from UPJVNL, to complete its accounts. The difference between opening balances of Assets & liabilities has been shown as Reconstruction Reserve under Capital Reserve in the Balance Sheet pending finalization of Transfer Scheme. F....
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....he Hon'ble ITAT against the order of CIT(A)-1. Dehradun for the aforesaid A.Y. 2005-06 only on one ground I.e., for allowing depreciation on fixed assets acquired from UPJVNL, the aforesaid appeal of the department has been dismissed by the Ld. ITAT New Delhi on 13thAugust, 2009, due to non approval of COD (Committee of Dispute). As per our knowledge no appeal has been filed so far, against the aforesaid order of the Hon'ble ITAT, moreover the above proceedings are also time barred by limitation, hence the order of the Ld. CIT (A) is final. Copy of the order of Hon'ble ITAT is enclosed herewith as Annexure 9. 4.2 The findings of Ld. AO and the averments of the Ld. AR have been considered. A perusal of the facts reveal that on demerger the assets were divided in a fixed ratio and needless to say, the cost of the same (WDV as on that date) was duly accounted for by both the entities. Thus, it is difficult to understand how it can be said that the assets were acquired free of cost. In any case there have been a succession of Appellate orders (as mentioned in the extract of submissions above) which have allowed the claim of depreciation. Following those orders the cla....
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....ct, 1961. The assessee is, therefore, entitled to depreciation. Somewhat similar situation arose in case of M/s Bharat Sanchar Nigam Limited (BSNL) when it got incorporated in 2000. Prior to BSNL's incorporation, the telecommunication services were being provided by Government of India, Ministry of Communication through its two departments, namely Department of Telecommunication Services and Department of Telecommunication Operation. The AO in case of BSNL referred to the capital structure of the BSNL to draw an inference that the cost of assets was being met by the general reserve as reflected in the capital structure of the company. As per AO, a sum equal to the general reserve would be required to be reduced from the cost of the assets in terms of Explanation 10 of Section 43(1) of the Act. This has been negated by the Hon'ble Delhi High Court vide order dated 09th May 2013 reported in 355 ITR 188(Del) by observing as under: "26. The scheme of hiving off the business of telecom services by Government of India to a corporate entity entailed incorporation of a wholly owned government company (i.e, the petitioner company) and the transfer of the business as a going concern....