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2016 (10) TMI 587 - AT - Income TaxRevision u/s 263 - as per CIT(A) AO has not examined the issue in depth so as to verify whether the written down value of the block of assets is net of grant amount and the amount of accumulated depreciation pertaining to the fixed assets disposed during the year was credited to the depreciation account and this aspect was not verified by the AO at the time of assessment - Held that:- The assessee received the grant from NDDB in the earlier years in relation to capital assets which was shown on the liability side of the balance sheet under the head reserve and surplus in the books of accounts. On the other hand, assessee recognized the capital assets at gross purchase value. As per the policy of the assessee the depreciation pertaining to the grant was written off against the grant value shown in the balance sheet and the balance depreciation pertaining to the net value of the fixed assets was charged in the profit & loss account. The assessee for the year under consideration has calculated the depreciation in the books of accounts for ₹ 3,42,10,774/- out of which proportionate depreciation of ₹ 73,34,650/- was adjusted against the grant value shown in the balance sheet and the balance depreciation of ₹ 2,68,76,124/- proportionate to the net value of fixed assets was debited in the profit & loss account. The assessee accordingly has added the depreciation of ₹ 2,68,76,124/- in the statement of income and reduced the depreciation by the amount as worked out as per written down value of the assets under the income tax Act for an amount of ₹ 1,84,61,661/-. We also find that the depreciation under the income tax act was calculated at the WDV which was brought forward from the earlier years. The WDV was duly accepted by the lower authorities. In the year under consideration no grant was received by the assessee in relation to any capital assets. The ld. DR failed to bring anything contrary to the arguments made by the ld. AR at the time of hearing. In view of above, we opined that the depreciation claimed by the assessee under the Companies Act and Income Tax Act is representing the correct figure. Similarly for the amount credited to the depreciation account during the year for the assets disposed, the ld CIT in his impugned order u/s 263 of the Act at the outset failed to bring any error from the financial statement of the assessee and has just directed the AO for examination and verification of the aforesaid amount. From the submission of the ld. AR, we find that this amount was adjusted with the figures of the depreciation account in the books of accounts. The aforesaid amount has not impacted the depreciation amount charged by the assessee in the computation of income. The aforesaid amount was the accumulated depreciation which was adjusted with the original cost of assets as a consequence of sale of the said assets during the year. The ld. DR failed to bring anything contrary to the arguments made by the ld. AR at the time of hearing. Accordingly we find no error in the order of AO having prejudice to the interest of Revenue. - Decided in favour of assessee.
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