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Gujarat Urja Vikas Nigam Ltd Versus Asstt. Commissioner of Income Tax

2015 (5) TMI 151 - ITAT AHMEDABAD

Disallowance of prior period expenses - Held that:- The assessee is a state government undertaking and therefore it cannot be postulated that there was any deliberateness in not furnishing the relevant details before the departmental authorities. Some details filed before us shows that some bills were received only in August 1996 but they relate to September to December 1994 and March 1995. We therefore set aside this issue to the file of the Assessing Officer who shall take a fresh decision in .....

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IT(A). We further find that Ld. CIT(A) decided the ground of Assessee in its favour subject to verification by AO and further the decision of ld. CIT(A) on the issue to be cryptic. We also find that ld. CIT(A) had directed the A.O to verify the figures and thereafter allow the loss of the amount actually written off in the books. On the issue of setting aside by CIT(A), it is to be noted that the Finance Act, 2001 has w.e.f. 1st June, 2001 withdrawn the power of CIT(A) to set aside the assessmen .....

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ble to peruse the details and decide the issue at our end. Considering the aforesaid facts and in the interest of justice, we are of the view that the factual aspect needs re-examination at the end of A.O. - Decided in favour of assessee for statistical purposes.

Disallowance of expenditure incurred on rehabilitation and restoration work as a result of cyclone - Disallowance on account of miscellaneous losses - Addition on account of under statement of income determined by C & AG - di .....

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our end. Considering the aforesaid facts and in the interest of justice, we are of the view that the factual aspect needs re- examination at the end of A.O. - Decided in favour of assessee for statistical purposes.

Disallowance of employees' cost - Held that:- We find that this ground was not taken by the Assessee before ld. CIT(A) but it arises out of the order of A.O for A.Y. 98-99. Considering the fact that A.O has disallowed the claim in A.Y. 1998-99 for the reason that liabi .....

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of assets. It is a fact that in the P & L A/c., the loss on obsolescence, loss on sale and loss on sale of scrap of fixed assets, loss on pilferage, loss of small items etc. are claimed. The appellant was specifically requested to explain the various journal entries in this regard and also treatment of such loss for purposes of income-tax but these were not furnished. Further it is likely that miscellaneous losses and write off, loss due to natural calamities etc. would affect the capital stock .....

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ation is admissible. Although it is emphasized before me that all the items are revenue in nature but in the absence of details, this fact could not be verified. The appellant is directed to provide necessary details to the AO and elaborate that none of the capital items is part of the loss claimed and that the capital items have been suitably considered in the depreciation calculation and is not part of the loss claimed. However if there are capital items which are claimed as loss these would s .....

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HBA loans - Held that:- The housing loans are disbursed to the employees at interest as a facility and to earn their loyalties and thus the expenditure is for business purposes. The Appellant is in the business of generation and in distribution of power and the advances are not in the course of the carrying on of the business but these are only having some connection with operational efficiency of the business. Thus the loss claimed is plain and simple capital loss which is not allowable. See B .....

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us and therefore we are also unable to peruse the details and decide the issue at our end. Considering the aforesaid facts and in the interest of justice, we are of the view that the factual aspect needs re- examination at the end of A.O. - Decided in favour of assessee for statistical purposes. - I.T. A. Nos.1087 to 1091 /AHD/2011 & 1109 & 1110/AHD/2011 - Dated:- 17-4-2015 - Shri Mukul Kr. Shrawat And Shri Anil Chaturvedi JJ. For the Appellant : Shri J.P. Shah, A.R. For the Respondent : Shri S .....

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the grounds in the appeals are identical and therefore the submissions are also common for all the appeals and therefore all the appeals can be heard together. The ld. D.R. did not object to the aforesaid submission of ld. A.R. We therefore proceed to dispose of all the appeals together for the sake of convenience and thus proceed by referring to the facts for A.Y. 1999-2000 in ITA No. 1087/AHD/2011. 3. The relevant facts as culled out from the material on record are as under. 4. Assessee is a .....

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and the total loss was determined ₹ 246,31,70,566/-. Aggrieved by the order of A.O., Assessee carried the matter before ld. CIT(A) who vide order dated 16.02.2011 granted partial relief to the Assessee. Aggrieved by the aforesaid order of ld. CIT(A) Assessee is now in appeal before us and has raised the following grounds:- 1. The learned Commissioner of Income Tax (Appeals) erred in law and on facts has confirmed the disallowance of prior period expenses amounting to ₹ 51,04,89,092/- .....

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cts necessary for deciding the issue were submitted at the time of hearing of the appeal. 3. The learned Commissioner of Income Tax (Appeals) has erred in law and on facts in setting aside the disallowance of Extra-ordinary items amounting to ₹ 21,91,00,234/- being the expenditure incurred on rehabilitation and restoration work as a result of cyclone. The learned Commissioner (Appeals) has further erred in law/and on facts in not giving any findings on the additions of ₹ 10.00 crores .....

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of Income Tax (Appeals) has erred in law and on facts in setting aside the disallowance of ₹ 50,07,138/- on account of miscellaneous losses and write offs on the ground that only revenue loss shall be allowed as business loss. 5.The learned Commissioner of Income Tax (Appeals) has erred in law and on facts in confirming the additions of ₹ 9,28,00,000/- on account of the alleged understatement of income which was reported by the C&AG in its report without appreciating the fact th .....

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under:- The employees' cost of ₹ 4,75,22,871/- ought to be allowed in Asst. Year 1999-2000 in view of the following finding of the Assessing Officer in his assessment order for the Asst. Year 1998-99:- "As regards, the employees cost of ₹ 4,75,22,871/-, on perusal of the General Standing Order No. 325 dated 3.6.1998, it is noted that the order is issued beyond the period of the previous year and the payment of arrears w.e.f. 1.1.1996 to the date of issue of the order will be .....

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to him the claim arises in A.Y. 1999- 2000. The Ld. AR therefore submitted that the additional ground now raised be admitted. Ld. D.R. on the other hand did not seriously object to the submission of Ld. AR. In view of the aforesaid facts, the additional ground raised by Assessee is admitted for adjudication. 1st ground is with respect to disallowance of prior period expenditure. 7. During the course of assessment proceedings and on perusing the Profit and Loss account, A.O noticed that Assessee .....

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aimed expenditure of ₹ 132,66,70,955/- under the head "provision for power purchase" but evidence of expenses was produced only to the extent of ₹ 132,42,44,728/-. He therefore disallowed the difference amount of ₹ 24,26,277/- on account of power purchase and the prior period expenditure of ₹ 50,80,62,865/- and thus made an aggregate disallowance of ₹ 51,04,89,092/-. Aggrieved by the order A.O, Assessee carried the matter before ld. CIT(A) who upheld the o .....

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nished. The AO was justified in rejecting the claim of prior period expenses. Ground no.2 is dismissed. 8. Aggrieved by the order of ld. CIT(A), Assessee is now in appeal before us. 9. Before us, at the outset ld. A.R. submitted that on identical facts in the case of Assessee for A.Y. 1997-98 similar disallowances was made by A.O. against which the matter was carried before Tribunal. Hon'ble ITAT in its order dated 26.06.2009 restored the issue to the file of A.O. He therefore submitted that .....

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Assessee, A.O was fully justified in making a disallowance. He thus supported the order of A.O and ld. CIT(A). 10. We have heard the rival submissions and perused the material on record. In the present case, the expenses were disallowed by the AO for the reason that Assessee did not furnish the required details and justify the claim of expenses. We find that in A.Y. 97-98 similar issue of disallowance of prior period expenses was before the co-ordinate Bench of Tribunal. The co- ordinate Bench o .....

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em as deduction. The learned counsel for the assessee however states that the liability in respect of most of the expenses got crystallized in the accounting year relevant, to the year under appeal and the assessee would be in a position to prove the same if opportunity is given. We have considered the prayer and are inclined to grant the same. The assessee is a state government undertaking and therefore it cannot be postulated that there was any deliberateness in not furnishing the relevant det .....

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efore us, since both the parties have admitted that the facts of the case in the year under appeal are identical to that of A.Y. 97-98 and therefore in these circumstances, we are of the view that following the order of Co- ordinate Bench of Tribunal for A.Y. 1997-98 and with similar directions, it would be appropriate to restore the matter back to the AO for deciding the matter afresh in accordance with law and after considering the material produced by the Assessee and after giving a reasonabl .....

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as bad and doubtful debts in the accounts of the Assessee, the claim of the assessee of bad debts cannot be allowed. He accordingly disallowed the claim of bad debts of ₹ 3,81,76,827/-. Aggrieved by the order A.O, Assessee carried the matter before ld. CIT(A) who decided the issue by holding as under:- 6. The third ground of appeal is against disallowance of ₹ 3,81,76,827/- being bad debts. 6.1 AO mentions that assessee had claimed deduction of ₹ 2,71,31,732/- as actual bad an .....

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year charged to P&L was ₹ 27.13 crore. 6.3 I have carefully considered the facts of the case, the submissions of the appellant and the assessment order. Prima facie the contention of appellant seems to be correct. The AO may verify the figures from the schedules and allow the loss actually written off in the books. Ground No.3 is allowed subject to verification by AO. 13. Aggrieved by the order of ld. CIT(A), Assessee is now in appeal before us. 14. Before us, ld. A.R. submitted that a .....

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fore us, Assessee has not placed any material on record to demonstrate that all the necessary evidence was produced before Ld CIT(A). We further find that Ld. CIT(A) decided the ground of Assessee in its favour subject to verification by AO and further the decision of ld. CIT(A) on the issue to be cryptic. We also find that ld. CIT(A) had directed the A.O to verify the figures and thereafter allow the loss of the amount actually written off in the books. On the issue of setting aside by CIT(A), .....

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s also a fact that before us, no details of the bad debts claimed have been filed by the assessee and therefore we are also unable to peruse the details and decide the issue at our end. Considering the aforesaid facts and in the interest of justice, we are of the view that the factual aspect needs re-examination at the end of A.O. We therefore set aside the issue to the file of A.O to decide the issue de novo after considering the submissions of the Assessee and in accordance with law. Needless .....

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bilitation and restoration work as a result of cyclone. 16. On perusing Schedule 16 of the annual statement of accounts, A.O noticed that Assessee had claimed loss of ₹ 21,91,00,234/- on account of flood, cyclone, fire etc and extraordinary credit of ₹ 10 crore under the head "subsidy against losses". A.O also noted that before him it was admitted that the losses claimed were based on the estimate and that Government of Gujarat had granted an amount of ₹ 10 crore agai .....

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le by the Assessee to Government of Gujarat and accordingly the electricity duty payable has been waived and thus it was cessation of trading liability. He therefore considered ₹ 10 crore as income of the Assessee. Aggrieved by the order A.O, Assessee carried the matter before ld. CIT(A) who decided the issue by holding as under:- 7.3 I have carefully considered the facts of the case, the submissions of the appellant and the assessment order. Although it is claimed before me that the entir .....

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sale of assets is to be reduced from the opening WDV for purposes of depreciation. Further any subsidy received is also to be reduced from W.D.V. of blocks. It is also to be appreciated that in case a block is empty or has no WDV, no depreciation is admissible. Although it is emphasized before me that all the items are revenue in nature but in the absence of details, this fact could not be verified. The appellant is directed to provide necessary details to the AO and elaborate that none of the c .....

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ld. A.R. reiterated the submissions made before lower authorities. With respect to the addition of ₹ 10 crore on account of grant received from Government of Gujarat, he submitted that there is no finding of ld. CIT(A) and therefore the matter may be remitted back to ld. CIT(A). The ld. D.R. on the other hand supported the order of AO. 19. We have heard the rival submissions and perused the material on record. We find that the grant of ₹ 10 crore received by the Assessee from Governm .....

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the Finance Act, 2001 has w.e.f. 1st June, 2001 withdrawn the power of CIT(A) to set aside the assessment and refer the case back to the AO for making a fresh assessment in accordance with the directions given by CIT(A). In view of the aforesaid amendment made by Finance Act 2001, we are of the view that Ld. CIT(A) does not have power to remand and therefore we do not approve the action of ld. CIT(A) in remitting the issue to the file of A.O. However at the same time, it is also a fact that bef .....

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ant adequate opportunity of hearing to the Assessee. We also direct the Assessee to co-operate with the Revenue authorities by promptly filing and submitting all the details called for by them. In case the details are not furnished by Assessee, then A.O shall be free to decide the issue based on the material on record. In the result, this ground of Assessee is allowed for statistical purposes. Ground no. 4 is with respect to disallowance on account of miscellaneous losses. 20. A.O noticed that A .....

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matter before ld. CIT(A) who decided the issue by holding as under:- 8.3 I have carefully considered the facts of the case, the submissions of the appellant and the assessment order. I am in agreement with appellant that loss of stock, consumables etc is revenue in nature. The appellant is directed to provide complete details of such revenue items. The rest of loss on capital items is to be adjusted through the block of assets. The ground is allowed subject to verification and aforesaid directi .....

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noted that in the absence of details, the nature and liability of the expenses could not be ascertained and determined and therefore he disallowed 10% of the expenses. We also find that the decision of ld. CIT(A) on the issue to be cryptic and further the matter was allowed subject to verification by A.O. On the issue of setting aside by CIT(A), it is to be noted that the Finance Act, 2001 has w.e.f. 1st June, 2001 withdrawn the power of CIT(A) to set aside the assessment and refer the case back .....

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ails and decide the issue at our end. Considering the aforesaid facts and in the interest of justice, we are of the view that the factual needs re- examination at the end of A.O. We therefore set aside the issue to the file of A.O to decide the issue de novo after considering the submissions of the Assessee and in accordance with law. Needless to state that A.O shall grant adequate opportunity of hearing to the Assessee. We also direct the Assessee to co-operate with the Revenue authorities by p .....

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ement of income determined by C & AG. 24. A.O on perusing the annual accounts of the Assessee noted that while auditing the accounts of the Assessee, Principal Accountant General (C &AG) in the audit report has pointed instances of under statement of income as well as expenditure. Assessee was asked to furnish explanation on the observations made by the auditor but the submission and explanation of the Assessee was not found acceptable to the A.O. He therefore considered aggregate amount .....

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f incomes were pointed out. The first related to under recovery of revenue of ₹ 0.58 crores from Mansa and Vizapur Nagarpalika. The assessee stated that as per electricity supply rules 1985 the amount would be recognized on cash basis. The A.O was of the view that Section 145 of the Act does not allow hybrid system of accounts and that income of ₹ 0.58 crore had accrued. Further the expenditure of ₹ 0.29 crores was in relation to employees of GSECL and is thus does not allowabl .....

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he amount to the profit. It is also contended that necessary effect of the understatement of entries have been given in assessment year 2000-01 and that if the addition is confirmed in the instant year the same should be deleted in A.Y. 2000-01. 9.3 I have carefully considered the facts of the case, the submissions of the appellant and the assessment order. The rationale and the basis for various additions/disallowances by A.O. on issues raised by C & A G is perfectly in order as the assesse .....

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also reported over statement of income but the AO has only considered a part of the report. Ld. A.R. also pointed to page 77 of the paper book which contained the financial impact of the various comments made by the auditor of C & AG. He therefore submitted that the addition made on the basis of report of C & AG is uncalled for. Ld. A.R. further submitted that in A.Y. 01-02 similar additions/disallowances were made and the issue was remitted back by ld. CIT(A). He also placed on record .....

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t of various observations of C & AG have been listed out. Before us, neither of the parties could reconcile the impact as shown by C & AG & that considered by AO for disallowance. On the issue of setting aside by CIT(A), it is to be noted that the Finance Act, 2001 has w.e.f. 1st June, 2001 withdrawn the power of CIT(A) to set aside the assessment and refer the case back to the AO for making a fresh assessment in accordance with the directions given by CIT(A). In view of the aforesai .....

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th law. Needless to state that A.O shall grant adequate opportunity of hearing to the Assessee. We also direct the Assessee to co-operate with the Revenue authorities by promptly filing and submitting all the details called for by them. In case the details are not furnished by Assessee, then A.O shall be free to decide the issue based on the material on record. In the result, this ground of Assessee is allowed for statistical purposes. Ground no. 6 is with respect to disallowance u/s. 43B. 28. A .....

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. Aggrieved by the order A.O, Assessee carried the matter before ld. CIT(A) who decided the issue by holding as under:- 10.3 I have carefully considered the facts of the case, the submissions of the appellant and the assessment order, The appellant is directed to submit all details to AO and AO is directed to verify the figures vis a vis last year details and allow the claim in terms of section 43B. The ground is allowed subject to verification and aforesaid directions. 29. Aggrieved by the orde .....

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aside the issue to the file of A.O for verification and deciding it. On the issue of setting aside by CIT(A), it is to be noted that the Finance Act, 2001 has w.e.f. 1st June, 2001 withdrawn the power of CIT(A) to set aside the assessment and refer the case back to the AO for making a fresh assessment in accordance with the directions given by CIT(A). In view of the aforesaid amendment made by Finance Act 2001, we are of the view that Ld. CIT(A) does not have power to remand and therefore we do .....

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at the end of A.O. We therefore set aside the issue to the file of A.O to decide the issue de novo after considering the submissions of the Assessee and in accordance with law. Needless to state that A.O shall grant adequate opportunity of hearing to the Assessee. We also direct the Assessee to co-operate with the Revenue authorities by promptly filing and submitting all the details called for by them. In case the details are not furnished by Assessee, then A.O shall be free to decide the issue .....

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1998, it is noted that the order is issued beyond the period of the previous year and the payment of arrears w.e.f. 1.1.1996 to the date of issue of the order will be paid by July, 1998, that too beyond the period of the previous year and thus, if at all the contention of the assessee is considered, the liability is crystallized in the subsequent year, i.e. in assessment year 1999-2000. As such, the claim of the assessee cannot be entertained and thus accordingly rejected." 33. Before us, l .....

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, on perusal of the General Standing Order No. 325 dated 3.6.1998, it is noted that the order is issued beyond the period of the previous year and the payment of arrears w.e.f. 1.1.1996 to the date of issue of the order will be paid by July, 1998, that too beyond the period of the previous year and thus, if at all the contention of the assessee is considered, the liability is crystallized in the subsequent year, i.e. in assessment year 1999-2000. As such, the claim of the assessee cannot be ente .....

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considering the submissions made by the Assessee, it is also a fact that before us, no details of the employees cost have been filed by the assessee and therefore we are also unable to peruse the details and decide the issue at our end. Considering the aforesaid facts and in the interest of justice, we are of the view that the factual aspect needs re-examination at the end of A.O. We therefore set aside the issue to the file of A.O to decide the issue de novo after considering the submissions o .....

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peal of Assessee in ITA No 1087/A/2011 for AY 1999-2000 is allowed for statistical purposes. ITA Nos. 1088, 1089, 1090, 1091, 1109 & 1110/AHD/2011( for A.Ys.2000- 01 to 2005-06). 37. The grounds raised by Assessee in A.Y. 2000-01 (ITA No. 1088/Ahd/2011) reads as under:- 1. The learned Commissioner of Income Tax (Appeals) has erred in law and on facts in setting aside the disallowance of Bad Debts of ₹ 14,95,34,791/- despite the fact that all the facts necessary for deciding the issue w .....

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shortages on physical verification of stock and pilferage of stock on the ground that details justifying that the same are revenue in nature may be filed before the Assessing Officer. 4. The learned Commissioner of Income Tax (Appeals) has erred in law and on facts in setting aside the disallowance of ₹ 4,44,69,750/- being loss on account of fixed assets destructed due to floods, cyclone etc., on the ground that the necessary details may be provided to the Assessing Officer. 5. The learne .....

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ed by Assessee in A.Y. 2001-02 (ITA No. 1089/AHD/2011) reads as under:- 1. The learned Commissioner of Income Tax (Appeals) has erred in law and on facts in setting aside the disallowance of Bad Debts of ₹ 10,32,21,009/- despite the fact that all the facts necessary for deciding the issue were submitted at the time of hearing of the appeal. 2. The learned Commissioner of Income Tax (Appeals) has erred in law and on facts in setting aside the issue relating to the disallowance of ₹ 1, .....

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ommissioner of Income Tax (Appeals) has erred in law and on facts in setting aside the disallowance of ₹ 11,62,82,783/- being loss on account of fixed assets destructed due to floods, cyclone etc., on the ground that the necessary details may be provided to the Assessing Officer. 5. The learned Commissioner of Income Tax (Appeals) has erred in law and on facts in setting aside the issue relating to the disallowance of an amount of ₹ 15,81,825/- being the capital expenditure written o .....

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ncome Tax (Appeals) has erred in law and on facts in setting aside the issue relating to the additions of ₹ 104,97,00,000/- on account of the alleged understatement of income which was reported by the C&AG in its report despite the fact all the facts necessary for deciding the issue were submitted before the learned Commissioner (Appeals). 39. The grounds raised by Assessee in A.Y. 2002-03 (ITA No. 1090/AHD/2011) reads as under:- 1. The learned Commissioner of Income Tax (Appeals) has .....

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ground that the necessary details may be provided to the Assessing Officer. 3. The learned Commissioner of Income Tax (Appeals) has erred in law and on facts in confirming the disallowance of Loss on Exchange Rate Variation amounting to ₹ 3,00,64,200/- treating the same as capital loss. 4. The learned Commissioner of Income Tax (Appeals) has erred in law and on facts in setting aside the issue relating to the disallowance of an amount of ₹ 54,74,000/- being the loss on sale of scrap .....

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e in A.Y 2003-04 (ITA No. 1091/AHD/2011) reads as under:- 1. The learned Commissioner of Income Tax (Appeals) has erred in law and on facts in setting aside the disallowance of ₹ 2,94,24,149/- being loss on account of fixed assets destructed due to floods, cyclones etc., debited under the head Extra-ordinary Items on the ground that the necessary details may be provided to the Assessing Officer. 2. The learned Commissioner of Income Tax (Appeals) has erred in law and on facts in confirming .....

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- 1. The learned Commissioner of Income Tax (Appeals) has erred in law and on facts in setting aside the disallowance of ₹ 5,25,95,389/- being loss on account of fixed assets destructed due to floods, cyclones etc., debited under the head Extra-ordinary Items on the ground that the necessary details may be provided to the Assessing Officer. 2. The learned Commissioner of Income Tax (Appeals) has erred in law and on facts in confirming the disallowance of Loss on obsolescence of fixed asset .....

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setting aside the issue relating to the disallowance of an amount of ₹ 38,28,000/- being the loss on sale of scrap on the ground that the necessary details may be provided to the Assessing Officer. 5. The learned Commissioner of Income Tax (Appeals) erred in law and on facts has confirmed the disallowance of ₹ 22,56,000/- being the waiver of HBA Loans allowed to the employees on the death of the employees while in service on the ground that the same is a capital loss. 6. The learned .....

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ound that details justifying that the same are revenue in nature may be filed before the Assessing Officer. 42. The grounds raised by Assessee in A.Y 2005-06 (ITA N0. 1110/AHD/2011) reads as under:- 1. The learned Commissioner of Income Tax (Appeals) has erred in law and on facts in setting aside the disallowance of ₹ 1,42,49,043/- being loss on account of fixed assets destructed due to floods, cyclones etc., debited under the head Extra-ordinary Items on the ground that the necessary deta .....

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loss on sale of scrap on the ground that the necessary details may be provided to the Assessing Officer. 4. The learned Commissioner of Income Tax (Appeals) has erred in law and on facts in setting aside the disallowance of ₹ 4,04,451/- being loss on sale of fixed assets on the ground that the necessary details may be provided to the Assessing Officer. 5. The learned Commissioner of Income Tax (Appeals) erred in law and on facts has confirmed the disallowance of ₹ 33,77,206/- being .....

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earned Commissioner of Income Tax (Appeals) has erred in law and on facts in setting aside the issue relating to the disallowance of ₹ 6,70,09,792/- being amount of shortages on physical verification of stock and pilferage of stock on the ground that details justifying that the same are revenue in nature may be filed before the Assessing Officer. 43. Before us, ld. A.R. submitted that grounds No. 1, 4 & 5 in ITA No. 1088/AHD/2011 for A.Y. 2000-01, grounds No. 1, 4, & 7 in ITA No 10 .....

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. were not objected to by ld. D.R. In view of the aforesaid facts, and for the reasons given while disposing the appeal for A.Y. 1999-2000 hereinabove and for similar reasons and with similar directions, we allow the aforesaid grounds raised in different assessment years for statistical purposes. Now we take up remaining grounds in ITA NO. 1088/A/2011 for A.Y. 2000-01. Ground no. 2 is with respect to disallowance of small items and ground no. 3 is with respect to write off of shortage on account .....

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e Assessee was not found acceptable to the A.O as he was of the view that in the absence of any provision in Section 32, the writing off of the assets of small value cannot be allowed and he accordingly disallowed the expenses. AO also noticed that assessee had claimed shortage of physical verification of materials (Rs 30,50,883/-) and loss of material by pilferage (Rs 18,53,156/-). AO noted that assessee did not adduce any evidence to justify the aforesaid claims and therefore the claim of asse .....

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It is a fact that in the P & L A/c., the loss out of extraordinary items, loss on pilferage, loss of small items etc. are claimed. The appellant was specifically requested to explain the various journal entries in this regard and also treatment of such loss for purposes of income-tax but these were not furnished. Further it is likely that miscellaneous losses and write offs loss due to natural calamities etc. would affect the capital stock as well as the revenue items. With a system of bloc .....

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e me that all the items are revenue in nature but in the absence of details, this fact could not be verified. The appellant is directed to provide necessary details to the AO and elaborate that none of the capital items is part of the loss claimed and that the capital items have been suitably considered in the depreciation calculation and is not part of the loss claimed. However if there are capital items which are claimed as loss these would stand disallowed with corresponding higher depreciati .....

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the order of A.O. 47. We have heard the rival submissions and perused the material on record. We find that A.O has noted that the details were not submitted before him nor were the details available before CIT(A). We also find that CIT(A) has remitted the matter to A.O. On the issue of setting aside by CIT(A), it is to be noted that the Finance Act, 2001 has w.e.f. 1st June, 2001 withdrawn the power of CIT(A) to set aside the assessment and refer the case back to the AO for making a fresh asses .....

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ils and decide the issue at our end. Considering the aforesaid facts and in the interest of justice, we are of the view that the factual aspect needs re- examination at the end of A.O. We therefore set aside the issue to the file of A.O to decide the issue de novo after considering the submissions of the Assessee and in accordance with law. Needless to state that A.O shall grant adequate opportunity of hearing to the Assessee. We also direct the Assessee to co-operate with the Revenue authoritie .....

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2 & 3, 5 & 6. 49. Before us, both the parties submitted that ground no. 2 & 3 of the present appeal are identical to ground no. 2 & 3 raised by Assessee in A.Y. 2000-01 and the submissions made by them while arguing the case for A.Y. 2000-01 are also applicable to the present grounds. 50. We have heard the rival submissions and perused the material on record. Before us, since both the parties have submitted that the issue raised in the present grounds being identical to the groun .....

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re was not allowable and accordingly disallowed the same. A.O also noted that Assessee had claimed loss on sale of fixed assets of ₹ 75,96,145/-. A.O was of the view that the same was also not allowable as being capital in nature and accordingly disallowed the claim. Aggrieved by the order of A.O, Assessee carried the matter before CIT(A) who upheld the order of A.O by holding as under:- 6.6 I have carefully considered the facts of the case, the submissions of the appellant and the assessm .....

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rious journal entries in this regard and also treatment of such loss for purposes of income-tax but these were not furnished. Further it is likely that miscellaneous losses and write off, loss due to natural calamities etc. would affect the capital stock as well as the revenue items. With a system of block of assets any loss on capital item is allowed with reference to the opening WDV and the asset lost/discarded is not reduced from the opening WDV. In effect the appellant is entitled to higher .....

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none of the capital items is part of the loss claimed and that the capital items have been suitably considered in the depreciation calculation and is not part of the loss claimed. However if there are capital items which are claimed as loss these would stand disallowed with corresponding higher depreciation as per provisions of sec.32, 2(11), 43(1) and 43(6). The ground is allowed subject to verification and aforesaid directions. Grounds No. 3,4,5,7 & 8 are allowed subject to verification an .....

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ee in its favour subject to verification by AO. We also find that the decision of ld. CIT(A) on the issue to be cryptic and he had directed the A.O to verify the figures and thereafter allow the claim of loss. On the issue of setting aside by CIT(A), it is to be noted that the Finance Act, 2001 has w.e.f. 1st June, 2001 withdrawn the power of CIT(A) to set aside the assessment and refer the case back to the AO for making a fresh assessment in accordance with the directions given by CIT(A). In vi .....

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we are of the view that the factual aspect needs re-examination at the end of A.O. We therefore set aside the issue to the file of A.O to decide the issue de novo after considering the submissions of the Assessee and in accordance with law. Needless to state that A.O shall grant adequate opportunity of hearing to the Assessee. We also direct the Assessee to co-operate with the Revenue authorities by promptly filing and submitting all the details called for by them. In case the details are not fu .....

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ced that assessee has claimed as revenue expense the loss on exchange rate variation towards credit facility in foreign exchange given by a supplier for K.L.T.P.S project. A.O was of the view that the expenses being capital in nature, not allowable and accordingly disallowed the expenses. Aggrieved by the order of A.O, Assessee carried the matter before Ld. CIT(A) who upheld the order of A.O by holding as under:- 8.3 I have carefully considered the facts of the case, the submissions of the appel .....

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Such was ratio of judgment in the case of DCIT vs Core Health Care Ltd. 298 ITR 194 (SC). The Hon'ble apex court have also mentioned that proviso to section-36(1)(iii) relating to capitalization of interest for pre-commencement period in the case of expansion of business is prospective i.e. applicable from Assessment Year 04-05 onwards though it is claimed before me that the funds were raised for existing business, no details could be furnished to establish this fact. The appellant is direct .....

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Assessee by the decision of Apex Court in the case of ACIT vs. Elecon Engg. Co. Ltd. 322 ITR 20 (SC) and therefore the issue has to be decided against the Assessee. 59. We have heard ld. A.R. In view of the submission of ld. A.R. that the issue is covered against the assessee by the decision of H'ble Apex Court. In view of the aforesaid facts, we dismiss the ground of assessee and thus this ground is dismissed. Ground no. 4 is with respect to disallowance of loss of sale of scrap. 60. A.O n .....

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enance cost to that extent. The submissions of the Assessee was not found acceptable and accordingly A.O disallowed the loss. Aggrieved by the order of A.O, Assessee carried the matter before CIT(A) who decided the issue by holding as under:- 9.3 I have carefully considered the facts of the case, the submissions of the appellant and the assessment order. The appellant is directed to provide complete details to the AO to explain that the sale price/scrap value as per books/WDV of assets discarded .....

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wer authorities and on the other hand ld. D.R. supported the order of A.O. 63. We have heard the rival submissions and perused the material on record. We find that the decision of ld. CIT(A) on the issue to be cryptic apart from the fact that he had set aside the issue to the file of A.O for verification and deciding it. On the issue of setting aside by CIT(A), it is to be noted that the Finance Act, 2001 has w.e.f. 1st June, 2001 withdrawn the power of CIT(A) to set aside the assessment and ref .....

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the details and decide the issue at our end. Considering the aforesaid facts and in the interest of justice, we are of the view that the factual aspect needs re-examination at the end of A.O. We therefore set aside the issue to the file of A.O to decide the issue de novo after considering the submissions of the Assessee and in accordance with law. Needless to state that A.O shall grant adequate opportunity of hearing to the Assessee. We also direct the Assessee to co-operate with the Revenue aut .....

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2011 for A.Y. 2004-05 65. Before us, both the parties submitted that ground no. 2 to 6 for the year under appeal are similar to grounds for A.Y. 05-06 and therefore the submissions made by them in AY 05-06 would be applicable to the present grounds. 66. We have heard the rival submissions and perused the material on record. Before us, since both the parties have submitted that the issue being identical to the ground raised in A.Y. 2005-06, we therefore for the reasons stated while disposing of g .....

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ble to the present grounds. 68. We have heard the rival submissions and perused the material on record. Before us, since both the parties have submitted that the issue being identical to the ground raised in A.Y. 2000-01 and AY 2002-03, we therefore for the reasons stated while disposing of grounds in AY 01-02 and 02-03 hereinabove and for similar reasons and directions allow the grounds for statistical purposes. Now we take up remaining grounds no. 5 & 6 in ITA No. 1110/AHD/2011 for A.Y. 20 .....

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. The facts stated by the appellant are not disputed. The principles for allowing the claim for deduction of such capital amounts in computing business income are well settled. It was held by the Supreme Court in Badridas Daga v. CIT [1958] 34 ITR 10: "When a claim is made for deduction for which there is no specific provision under section 10(2), whether it is admissible or not will depend on whether, having regard to the accepted commercial practice and trading principles, it can be said .....

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ourt in the case of Indore Malwa United Mills Ltd. The key issue is whether the loss claimed arises directly from the carrying on the business or it has some connection with the business. It is submitted before me that the housing loans are disbursed to the employees at interest as a facility and to earn their loyalties and thus the expenditure is for business purposes. The Appellant is in the business of generation and in distribution of power and the advances are not in the course of the carry .....

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(A). 72. We have heard the rival submissions and perused the material on record. We find that CIT(A) while upholding the order of A.O had relied on the decision of Apex Court in the case of Badridas vs. CIT (1958) 34 ITR 10 (SC). Before us, ld. A.R. has not brought any contrary binding decision in its support. We therefore find no reason to interfere with the order of CIT(A) and thus this ground of is dismissed. Ground no. 6. is with respect to disallowance of cost of raising finance. 73. A.O no .....

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ellant and finance charges/fees, discounting charges, trustees' fees and have been paid in connection with garnering the funds. It is immaterial whether the funds are borrowed for capital or revenue purposes and as long as these are not for expansion of business for which the expenses need to be capitalized and allowable as part of depreciation after commencement of business, the expenditure otherwise is in revenue fold. Such was ratio of judgment in the case of DCIT vs Core Health Care Ltd. .....

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ould stand allowed otherwise the expenses related to expansion of business would need to be capitalized and allowed as depreciation from the year in which assets were first put to use. Ground no. 8 is allowed subject to verification and aforesaid directions. 74. Aggrieved by the order of CIT(A), Assessee is now in appeal before us. 75. We have heard the rival submissions and perused the material on record. We find that the claim of expenses incurred for raising finance was disallowed by the A.O .....

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