Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2017 (2) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2017 (2) TMI 631 - AT - Income TaxReopening of assessment - disallowance of claim of additional depreciation and claim of deduction u/s 43B - Held that:- In the instant case, the assessee has claimed depreciation on power plant and windmill @ 80% on written down value basis under section 32(1)(ii) of the Act. The Assessing officer has not challenged such claim of depreciation under section 32(1)(ii), however, on the same assets, the claim of additional depreciation under section 32(1)(iia) has now been challenged by issuance of notice u/s 148 of the Act. The basis of formation of belief by the AO that the assets falls under clause (i) and not clause (ii) and hence, claim of additional depreciation on such assets is not allowable, cannot therefore be accepted. More so, when the claim of depreciation on such assets under section 32(1)(ii) has been allowed by the Revenue in original assessment proceedings and also in the instant reassessment proceedings which are under challenge before us. There cannot be a situation where the additional claim of depreciation is disputed stating that the original claim of depreciation has been wrongly claimed but without disturbing (rather accepting) such original claim of depreciation. We are therefore of the considered view that the reasons recorded are self-contradictory and cannot form the basis to initiate reassessment proceedings. On this ground alone, the reopening of assessment u/s 147 cannot be held valid in law and is liable to be quashed. As far as the issue of claim of deduction u/s 43B of the Act we agree with the contentions of the ld. AR that the issue has been duly examined by the AO during the course of original assessment proceedings and to this extent there is clearly a change of opinion which has been rightly upheld by the ld. CIT(A). - Decided against revenue. Disallowance on account of additional depreciation on the assets of power generating units - CIT(A) allowed the claim - Held that:- It is now a settled position that the process of generation of electricity is akin to manufacture of an article or thing, the assessee in the instant case satisfy the requirement that it is engaged in the business of manufacture or production of an article or thing. Now coming to the amendment which has been brought-in by the Finance Act 2012 w.e.f. A.Y. 2013-14 whereby the assessee engaged in the business of generation or generation & distribution of power have specifically been included and held eligible for claim of additional depreciation. In our view, the said amendment cannot be held to disentitle the assessee to claim of the additional depreciation. Various Coordinate Benches have held that even prior to the amendment brought in by the Finance Act 2012, the assessees engaged in generation or generation and distribution of electricity were held eligible for additional depreciation. In light of above, the assessee is held entitled to the additional claim of depreciation on the power plant and the windmill installed during the year. Hence the ground of the department is dismissed. Disallowance u/s 43B - CIT(A) allowed the claim - Held that:- The service tax and land tax are statutory liabilities which are paid during the year as per the orders of the CESTAT and Hon’ble Rajasthan High Court. These are statutory liabilities which pertain to the business carried on by the assessee. The assessee cannot be denied a deduction in respect of these payments merely on account of the fact that these are payments in respect of matters which are contested before the authorities and no expenditure is book in the profit and loss account. The decision of Hon’ble Delhi High Court in case of Dharampal Satyapal Sons (2010 (11) TMI 993 - DELHI HIGH COURT) supports the case of the assessee. In light of above, we upheld the order of the ld CIT(A) in deleting the disallowance u/s 43B - Decided in favour of assessee
|