Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2012 (9) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2012 (9) TMI 1027 - AT - Income TaxDeduction u/s 80JJAA - workmen as employed for more than 300 days - loss on damage - shipment of computers - revenue or business loss - TP Adjustment - capital loss u/s 45(1) - HELD THAT:- As a matter of fact, the assessee had placed order for supply of machinery. When the equipment was in transit, according to the assessee, it got damaged and returned to the supplier. The Insurance Company had compensated the assessee a part of the cost of the asset so damaged. As rightly pointed out by the AO, the difference between the cost of the equipment and the amount so reimbursed by the Insurance Company was a capital loss having been incurred in relation to acquisition of a capital asset. The nature of expenditure has to be decided by the objective with which it is incurred and not by the nomenclature or the accounting treatment given to the expenditure. The main objective of the assessee was to acquire the machinery and naturally the entire expenditure for its acquisition will have to be capitalized. In the instant case, the equipment got damaged while in transit, the Insurance Company after duly assessing the damage compensated a portion of the cost of the equipment. Moreover, the assessee had treated the receipt of the insurance claim as a capital receipt in its accounts. Thus, the remaining portion of the cost of the equipment, as rightly observed by the AO and subsequently sustained by the CIT (A), cannot be allowed as a revenue loss. Therefore, we are of the considered view that the AO was fully justified in rejecting the assessee’s claim of deduction being the loss on account of damage to an asset. We find that there has been no finding recorded by the first appellate authority. With regard to the assessee’s other alternative claim of loss on account of damage of computer equipments constitutes short term capital loss u/s 45(1A) of the Act, we would like to point out that the assessee had not raised this contention before the lower authorities. However, since the claim is purely a legal issue, in the interest of justice, we are of the view that the matter needs to be considered by the CIT(A). Thus, both the alternative claims are restored back to the file of the CIT (A)-LTU with a specific direction to address to the grievance of the assessee after obtaining the required clarifications from the assessee, if need be, and to take appropriate action in accordance with the provisions of the relevant Act. It is ordered accordingly. TP Adjustment : We are of the view that since the CIT(A) has not considered the issue, the matter needs to be restored to the CIT(A) for denovo consideration. It is in doubt, after having accepted the MAP resolution passed by the competent authority, whether the ALP arrived at can be altered. However, since the issue was not disposed off by the CIT(A), addressing the assessee’s contention, we deem it fit and proper to restore the matter to the CIT(A). Accordingly, ground no.9 raised by the assessee is treated as allowed for statistical purposes. Deduction u/s 80JJAA - Employees worked for less than 300 days in the previous year - We have perused the findings of the Hon’ble earlier Bench for the AYs 2001-02 and 2002-03 in the assessee’s own case wherein the Hon’ble Bench had allowed the claim of deduction. Therefore, we are of the considered view that the issue requires re-examination. The CIT(A) had set aside the assessment giving specific direction to Assessing Officer to disallow the 80JJAA claim in respect of permanent employees salary who have worked for less than 300 days in the concerned previous year. The CIT(A) has not considered the assessee’s elaborate submission in respect of the issue. Therefore, in the interest of justice and equity, the matter is remanded to the CIT(A) for fresh consideration. It is ordered accordingly. In the result, the assessee’s appeal is partly allowed for statistical purposes.
|