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2014 (6) TMI 285 - AT - Income TaxAddition of entire subsidy amount received from Govt. – Held that:- The Assessee had shown subsidy as revenue in the books of accounts and had followed mercantile system of accounting – assessee had followed this practice consistently on matching principal of accounting - The expenses from Solid Waste Tank had been debited by the Assessee proportionately on the basis of quantity of dumping of Solid Waste Disposal - assessee had followed the same account principal on subsidy as well as expenditure on the basis of quantity of dumping of Solid Waste Disposal – Relying upon Madras Industrial Investment Corporation Limited Versus Commissioner of Income-Taxd [1997 (4) TMI 5 - SUPREME Court] - CIT(A) was not right to confirm the addition made by the AO – thus, the AO is directed to to booked subsidy as income proportionately for the years to which it pertain – Decided in favour of Assessee. Disallowance of proportionate cost of land out of solid waste tank expenses – Held that:- The land is not deprecitable and entire is not a cost of assessee’s business having revenue nature. It generally fetches appreciation in future – Following The Green Enviornment Servicves Co. Op. Services Ltd. Versus The ITO, Ward 6(4), Ahmedabad [2014 (4) TMI 1003 - ITAT AHMEDABAD] - CIT(A) has rightly observed that the science is changing fast - There could be some device in future to make use of the said lands also - land being fixed asset and only fetches appreciation in future, it cannot be said such property purchase to be treated as a revenue expenditure - CIT(A) has rightly dismissed the appeal filed by the assessee – cost of land debited by the Assessee in Profit and Loss account is not allowable as revenue expenditure - thus, there was no illegality in the order of the CIT(A) – Decided against Assessee. Invocation of explanation 10 to section 43(1) of the Act – Reduction in accumulated amount of member’s contribution from the written down value of plant and machinery – Held that:- Accumulated amount of contribution made by the members is pertained to earlier years also which cannot be reduced from the cost of plant and machinery under the year of consideration as per Section 43(1) - The actual cost means the actual cost of the assets to the Assessee reduce by that portion of cost as has been met directly or indirectly by any other person or authority - The appellant is getting contribution from the members as reimbursement of the cost of plant and machinery during the years - whatever contribution received by the Assessee in respective assessment years should be allowed to be reduced from the actual cost of plant and machinery and thereafter depreciation is to be allowed on remaining cost of the plant and machinery by the AO – thus, the AO is directed to verify the actual cost of plant and machinery in each year as opening written down value of the plant and machinery addition made during the year minus cost met from the contribution of the members year wise – thus, the matter is directed to AO for fresh adjudication – Decided in favour of Assessee.
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