2010 (5) TMI 857 - AT - Income Tax

Summary

Issues Involved:

1. Depreciation u/s 32 on the basis of written down value.
2. Exclusion of interest written back u/s 41(1).
3. Deduction in respect of capital advances written off.
4. Determination of assessed income lower than the returned income.

Summary:

Issue 1: Depreciation u/s 32 on the basis of written down value

The assessee contended that depreciation should be granted u/s 32 based on the written down value of various block of assets as determined in earlier years. However, the Learned Counsel did not press this ground, and it was treated as withdrawn.

Issue 2: Exclusion of interest written back u/s 41(1)

The assessee argued that an amount of Rs. 2,91,51,000/- should be excluded from the total income as it pertains to interest not allowed as a deduction in earlier years. The CIT (A) confirmed the disallowance but directed that if the disallowance of interest in those cases is confirmed, the same should be excluded in the assessee's case. The Tribunal directed the Assessing Officer to exclude the amount of Rs. 2,91,51,000/- for the assessment year 2003-04, with the condition that if the assessee succeeds in claiming the amounts in the respective assessment years, the amount should be brought to tax in this assessment year.

Issue 3: Deduction in respect of capital advances written off

The assessee claimed a deduction for capital advances written off amounting to Rs. 10,53,587/-. The CIT (A) rejected the claim, stating it was in respect of advances made in the capital field and not bad debts. The Tribunal found that the CIT (A)'s finding was not based on record and directed the Assessing Officer to examine the claim afresh and consider it as per the provisions of the Act.

Issue 4: Determination of assessed income lower than the returned income

The Assessing Officer determined the total income at Rs. 2,39,83,053/-, which was lower than the returned income of Rs. 3,72,32,930/-. Consequently, the Assessing Officer accepted the returned income. The CIT (A) confirmed this action. The Tribunal, however, held that the Assessing Officer has the power to re-determine the total income according to the provisions of the Act, even if it results in an income lower than the returned income. The Tribunal directed the Assessing Officer to determine the total income according to the provisions of the Act, after giving effect to various orders of higher authorities of earlier years and also to this order.

Conclusion:

The appeal was partly allowed, with directions to the Assessing Officer to re-examine certain claims and determine the total income as per the provisions of the Act.