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2018 (10) TMI 1700 - AT - Income TaxAdditional depreciation on account of Wind Mills commissioned and operated by the assessee - whether generation of electricity was not in the nature of manufacture or production as intended u/s.32(1)(iia)? - HELD THAT:- We find that the power generation is a manufacturing activity and duly recognized by the government. It is a priority section under the government policies. In this particular business, wind is the raw-material for generation of electricity and/or power by wind mills through which the turbines are operated and power is generated and transmitted to grid lines. Since this is manufacturing activity claim of additional depreciation under the provisions of section 32(1)(iia) of the Act is attracted, in fact, the activity has been well verified by the auditors of the company which have been certified separately by way of certificates which are required to be submitted for claiming such additional depreciation u/s.32(1)(iia) as discussed above in Form No.3AA copy whereof was also submitted with the return of income as a part of audited report by the assessee. As relying on GUJARAT STATE FERTILIZER AND CHEMICALS LTD [2017 (3) TMI 1337 - GUJARAT HIGH COURT] assessee is entitled to claim of depreciation u/s.32(1)(iia) of the Act on windmill and we, therefore, find no reason to interfere with the order passed by the CIT(A). Thus, the appeal preferred by the Department against the impugned order is dismissed. Addition u/s. 41(1) - Assessee had failed to discharge its onus to prove existence of the liability to pay the creditors - HELD THAT:- We find that merely because the liabilities are outstanding for a long period of time the same cannot be said to be ceased to exist. Neither the AO has proved that the assessee has obtained the benefit of the said liabilities by way of remission or cessation thereof. The judgments cited above have decided the same issue involved in this matter as discussed. We, therefore, find no infirmity in the order passed by the CIT(A) and respectfully following the judgments, we decline to interfere with the same. This ground of appeal preferred by the Revenue is thus dismissed. ] Disallowance on account of setting off STCG against depreciation - HELD THAT:- A decided in MAHALAXMI SUGAR MILLS COMPANY LIMITED [1986 (7) TMI 83 - SUPREME COURT] which decided the issue of the present case relating to setting off STCG against brought forward unabsorbed depreciation in favour of the assessee, we find no justification to interfere with the order passed by the Ld. CIT(A) and dismiss this ground of appeal preferred by the Department. Addition u/s.68 - HELD THAT:- AO the duties of the assessee casted upon him u/s.68 of the Act has rightly been discharged in order to establish the identity, genuineness and creditworthiness. Relying upon judgment of Hon’ble Gujarat High Court in the matter of Ranchood Jivabha Nakhava [2012 (5) TMI 186 - GUJARAT HIGH COURT] the further observed that it was the Ld. Assessing Officer who is to find out from the records available with him since Shri Pradip S. Mehta being one of the assessees also under him has no creditworthiness before making such addition u/s.68. He therefore deleted the addition of ₹ 20,05,000/-. AO failed to consider that the loan was accepted through banking channel only and the details which was given by the authorized signatory of the Director were also not verified vis-a-vis records available with him in its proper perspective. The said lacuna has rightly been pointed out by the CIT(A) and deleted the addition accordingly. We thus do not find any infirmity in the order of the Ld. CIT(A). The ground of appeal preferred by the Revenue is therefore disallowed by us Disallowance of claim on account of bad debt written off - HELD THAT:- Relying upon the judgment of TRF Ltd [2010 (2) TMI 211 - SUPREME COURT] as being settled principle of law, we find no infirmity in the order passed by the Ld. CIT(A) and the same is hereby upheld. Addition of cash deposit - HELD THAT:- CIT(A) on the basis of the audited books of accounts and in the absence of any adverse comment by tax auditor or finding of incorrect cash book and the recording of transactions and reflections in the books of accounts found no fault on the part of the assessee neither reason to disbelieve the assessee as made by the AO because of export business of the assessee only on assumption and without any basis. CIT(A) found the addition is based on surmises & conjectures in the absence of verification made by AO. Relying upon the judgment of the Saurin Nandkumar Shodhan [1999 (2) TMI 5 - SUPREME COURT] holding that presumption on surmises by the Ld. Assessing Officer cannot be justified for such audited cash book and bank book the Ld.CIT(A) deleted such addition. Taking into consideration the ratio laid down by the Coordinate Bench in the matter of Saurin Nandkumar Shodhan, we find no infirmity in the order passed by the ld.CIT(A), same is hereby upheld. Thus, this ground of appeal raised by the Revenue is dismissed.
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