TMI Blog2010 (3) TMI 996X X X X Extracts X X X X X X X X Extracts X X X X ..... e company. It is mentioned that the addition is not of such a nature which can lead to the conclusion of concealment of income or furnishing inaccurate particulars of income. The facts in regard to the claim of depreciation are mentioned by the ld. CIT(Appeals) in paragraph 4 along with his conclusion that the expenditure had to be reduced from reserves and surplus for giving proper picture of financial health of the company. For the sake of ready reference, this paragraph is reproduced below:- 4. The assessee company had made payment of money to U.P. State Electricity Board for laying of power lines and installing a sub-station at Sahibabad in the factory premises of the assessee, in the A.Y. 1999-00 of Rs. 181.30 lakh, the assessee is claiming depreciation on this amount of payment, treating it as capital expenditure incurred by the assessee and owner of such power lines and sub-section. The payment was made to UPSEB for laying of a 220 KV power line from their grid of Bhushan Steel Ltd. s 220 KV sub-station. The said power line was meant fro the exclusive use of the company and entailed the guarantee of continuous supply of power in synchronize thereof with the UP State Elect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k to the total income of the assessee. 3. Before us, the ld. counsel submitted that the assessee had made payment of Rs. 181.30 lakh in the previous year relevant to assessment year 1999-00 to UP State Electricity Board ( UPSEB for short) for laying a 220KV power line from their grid to the sub-station of the assessee. This line was meant for exclusive use of the assessee, which ensured uninterrupted power supply to its unit. The assessee capitalized this expenditure and claimed depreciation year after year. The claim for depreciation was denied in past as well as in this year on the ground that the assessee was not the owner of the power line. This decision has been accepted by the assessee. However, the expenditure could otherwise be claimed in full in assessment year 1999-00 as revenue expenditure because the assessee did not become owner of any capital asset by dint of the aforesaid expenditure. In any case, the issue whether the expenditure is of revenue nature or capital nature is not free from doubt. Therefore, capitalization of expenditure and deduction of depreciation thereon in the year of expenditure and thereafter was not such an act as to invite penalty u/s 271(1)( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure in the year of its incurring in view of the decision of Hon ble Punjab Haryana High Court in the case of CIT Vs. Panbari Tea Co. Ltd., (1985) 151 ITR 726. The question in that case was whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the sum of Rs. 33,228/- paid by the assessee to the Assam Electricity Board is allowable as a revenue expenditure? The amount was paid against charges for laying service line etc. The question was answered in affirmative, i.e., in favour of the assessee and against the revenue. The ld. CIT(Appeals) did not consider this aspect of the issue but decided the matter on the basis of the past decisions in the matter. The fact is that the issue whether the expenditure was revenue in nature or capital in nature was not examined as the limited issue in quantum appeals was in regard to deduction of depreciation, which was answered in negative, i.e., against the assessee and in favour of the revenue. However, we are of the view that the assessee could possibly claim the whole of the expenditure as revenue expenditure in assessment year 1999-00 and the result would have been that the deductions now cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich it is mentioned that the assessee had not claimed correct deduction u/s 80-IB in the original return of income, but submitted form no. 10-CCB and computed the deduction. A note was also placed that in case the income becomes a positive figure in the course of assessment proceedings, the claim should be allowed. The AO assessed the income at Rs. 31,59,46,003/- and, therefore, allowed deduction u/s 80-IB. The claim was, however, examined and it was found that the assessee claimed public issue expenses and share capital expenses aggregating to 83,68,537/-. No amount was allocated to the eligible unit from this expenditure. The appellate order, however, does not speak of the claim in regard to gratuity expenses, which in fact have been shown at Rs. 7,36,766/- in assessment year 2004-05. On the basis of these observations, the case of the ld. counsel was that the claim was not made in the return of income, but only a note was made that in case income is assessed at a positive figure, the claim u/s 80-IB may be allowed. This does not amount to furnishing inaccurate particulars of income or even concealing the income. In reply, the case of the ld. DR was that the re-computation has a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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