2015 (11) TMI 290 - AT - Income Tax

Disallowance of prorata depreciation - Held that - When a loan is waived/written off by an assessee it is not an allowable deduction as it is capital in nature and similarly when the loan is waived in favour of assessee it retains its capital nature and does not result into a taxable receipt. It further submitted that when an asset is revalued up-ward depreciation allowance as per Income Tax Act remains as per WDV of assets. Similarly the assessee pleaded that when fixed assets of a company are revalued downward due to receipt of grant or waiver of loan the consequent reduction in depreciation on the amount of waiver is not justified. However the Assessing Officer did not agree with the contention of the assessee and made the addition confirmed by ITAT. - Decided against assessee. Allowability of prior period expenses - Held that - FAA has correctly allowed the claim of the assessee by observing that lodging of the claim by the company on railways for the wagons not reaching their destination and being reversed in all cases where the railways have been able to prove their delivery at some plant or stock yard of the assessee though not the original destination appears to be a regular feature in past many years. Thus there is sufficient force in the submissions of the assessee and this is a regular feature which is normal debit in almost every year.Thereafter he further held that since this debit of Rs. 102 lakhs is on account of a claim accounted as income in the earlier A.Y. which has been reversed in this year after settlement with the railways it is allowable in this year. Therefore the disallowance of Rs. 102 lakhs is deleted in this year also. - Decided against revenue. Allowability of depreciation on water supply and sewerage plant - Held that - This issue is covered in favour of the assessee and against the Revenue by the decision of the ITAT in a ssessee s own case for the A.Y. 2007-08 Disallowance of interest claimed on KFW Germany loan transfer to Foreign Exchange Fluctuation Reserve - Held that - Admittedly this issue has arisen for the A.Y. 1998-99 onwards to the A.Y. 2002-03. The ITAT had deleted the disallowance in all these years. For the A.Y. 2007-08 the ITAT upheld the order of the Ld.CIT(A) where this disallowance has been deleted. Depreciation on assets not in active use is covered in favour of the assessee and against the Revenue for all the earlier A.Ys. Rate of depreciation allowable on fibre optic computer net working and on UPS of computers - Held that - Admittedly this issue is covered in favour of the assessee by the order of the Tribunal for the A.Y. 2007-08 wherein the Revenue was directed to grant depreciation at the rate of 60% by following the judgement of the Jurisdictional High Court in the case of CIT vs. BSES Yamuna Powers Ltd 2010 (8) TMI 58 - DELHI HIGH COURT - Decided in favour of assessee. Disallowance u/s 43B of provident fund dues deposited within the grace period - Held that - The fact that the PF dues were deposited within the grace period allowed under the respective Act and before the due date of submitting the return u/s 139(1) of the Act is not in dispute - See Commissioner of Income Tax Versus AIMIL Limited and others 2009 (12) TMI 38 - DELHI HIGH COURT wherein held the assessee can get the benefit if the actual payment is made before the return is filed - Decided in favour of assessee.

Summary

Issues:
1. Disallowance of pro-rata depreciation on account of downward revaluation of assets in A.Y. 2000-2001.
2. Addition of prior period expenses.
3. Disallowance of depreciation on water supply and sewerage plants.
4. Disallowance on account of Foreign Exchange Fluctuation.
5. Disallowance of depreciation on assets not in active use.
6. Disallowance on depreciation of "Fiber Optic Computer Networking" and UPS.
7. Disallowance made under section 43B of the Income Tax Act.
8. Disallowance of depreciation on intangible assets of mining rights.
9. Addition on account of Long Service Awards provided on actuarial basis.
10. Addition made on account of Leave Travel Concession (LTC).

Analysis:

1. The case involved cross-appeals against the order of the Ld.CIT(A) for A.Y. 2009-10. The first issue was regarding the disallowance of pro-rata depreciation on assets revaluation in A.Y. 2000-2001. The Tribunal dismissed the appeal based on past decisions.

2. The second issue concerned the addition of prior period expenses. The First Appellate Authority allowed the claim, stating it was a regular feature and allowable under relevant sections of the Act. The Tribunal upheld this decision, dismissing the Revenue's appeal.

3. The next issue was the disallowance of depreciation on water supply and sewerage plants. The Tribunal upheld the First Appellate Authority's decision based on a previous ruling in favor of the assessee.

4. The disallowance on account of Foreign Exchange Fluctuation was the fourth issue. The Tribunal dismissed the Revenue's appeal, citing consistency with past decisions.

5. The fifth issue was the disallowance of depreciation on assets not in active use. The Tribunal dismissed the Revenue's appeal based on previous rulings.

6. The sixth issue was the disallowance of depreciation on "Fiber Optic Computer Networking" and UPS. The Tribunal upheld the assessee's position, following previous judgments.

7. The seventh issue was the disallowance made under section 43B of the Income Tax Act. The Tribunal dismissed the Revenue's appeal, citing compliance within the grace period.

8. The eighth issue involved the disallowance of depreciation on intangible assets of mining rights. The Tribunal clarified that the matter was not restored by the Ld.CIT(A) to the AO, dismissing the ground.

9. The ninth issue was the addition on account of Long Service Awards provided on an actuarial basis. The Tribunal upheld the First Appellate Authority's decision based on previous rulings.

10. The last issue was the addition made on account of Leave Travel Concession (LTC). The Tribunal dismissed the Revenue's appeal, following previous judgments.

In conclusion, both the Revenue's and the assessee's appeals were dismissed, and the Tribunal upheld various decisions based on past rulings and legal interpretations.