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2014 (8) TMI 1131 - AT - Income TaxReopening of assessment u/s.147 - disallowance of claim of depreciation in respect of its cement factory at Gujarat - days of use of asset - Held that:- No justification on the part of the lower authorities for decline of the claim of depreciation when the fact of assessee having used the machinery for trial run was not declined by any of the lower authorities. Even use of machine for one day will entitled the assessee for claim of depreciation. Since it is not clear from the record as to the period for which machinery was actually used by assessee, we direct the AO to verify the period of used and restrict the claim of depreciation to 50%, if he finds that machinery was used for less than 180 days during the year under consideration. Computation of book profit u/s.115JA - provision made for ECC jobs was directed to be reduced from book profit on the plea that it was ascertained liability - Held that:- While working the book profit u/s.115JA, the AO has added the provision for ECC jobs. We also found that the provision made for ECC jobs was for ascertained liability which was also added by the assessee in the valuation of work-inprogress. Thus, effectively, it was not an item of profit and loss account but was an item of trading account insofar as it was also added in work-in-progress forming the part of trading account. We found that similar additions made in the A.Y.1988-89 was also deleted by the Tribunal in assessee’s own case. Accordingly, we do not find any infirmity in the order of CIT(A) for deleting the addition made on account of provision for ECC jobs.
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