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2015 (9) TMI 1109 - ITAT HYDERABAD

2015 (9) TMI 1109 - ITAT HYDERABAD - [2015] 44 ITR (Trib) 154 (ITAT [Hyd]) - Reopening of assessment - assessee has claimed depreciation at 5.24 Crores on WDV of 6.32 Crores which is 83% of the WDV - Held that:- On verification of computation of income filed along with return of income as well as perusal of the order indicate that assessee has not claimed any depreciation while claiming only loss incurred in the business. Therefore, question of disallowing the depreciation does not arise. From t .....

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essee pleaded that they were not in the business at that point of time during the period of completion of assessment and now they have restarted the business, they were in a position to furnish the necessary details. In view of that, we are of the opinion that one more opportunity can be given to assessee to substantiate the claims made in the return of income / P&L A/c. Assessee is directed to furnish necessary details to AO and AO to examine whether the amounts can be allowed as write off as p .....

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either due to fresh credit. It could be due to increase in interest on the existing loans. Therefore, without examining the details, it is not possible to confirm the same just because, assessee could not furnish any details. Here also Ld. Counsel pleaded that assessee can furnish necessary details before the AO. In view of this, this ground is restored to the file of AO to examine the nature of credit and treat accordingly as per the provisions of law and facts - Decided in favour of assessee .....

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irrecoverable. As and when they are recovered, the same are automatically to be taxed under the provisions of Section 41(1). In view of the specific provisions of Section 36(1)(vii), write off of the amount is enough to allow the same. As there is no dispute with reference to the fact that these amounts are not capital in nature, AO is directed to allow the amounts - Decided in favour of assessee - ITA No. 1318/Hyd/2011 - Dated:- 26-6-2015 - B. Ramakotaiah, AM And Saktijit Dey, JM, JJ. For the .....

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ot find any merit in the additional grounds raised. In view of this, ground is dismissed as withdrawn. 3. Coming to the main Grounds of Appeal, assessee has raised as many as 13 grounds on five issues of additions made by the Assessing Officer (AO) in the assessment order. Ground No. 2, 3, 4, 5 and 9 are material grounds which are as under: "2. The Dy. Commissioner of Income Tax, Circle-16(3), Hyderabad has erred while disallowing an amount of ₹ 1,84,81,375/- towards advances - others .....

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ioner of Income Tax, Circle-16(3), Hyderabad has erred while disallowing an amount of ₹ 31,34,838/- towards advances written off and the same has been confirmed by the Commissioner of Income tax-V, which is not correct, not justified and bad in law. Hence, the addition may ple1,69,89,612/- towards Bad debts written off and the same has been confirmed by the Commissioner of Income tax-V, which is not correct, not justified and bad in law. Hence, the addition may please be deleted. 5. The Dy .....

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missioner of Income tax-V, which is not correct, not justified and bad in law. Hence, the addition may please be deleted". The rest of the grounds are submissions on various issues which do not require any adjudication. 4. Briefly stated, assessee is in the business of internet service provider and in the impugned assessment year filed return of income admitting a total loss of ₹ 3,96,52,413/-. AO noticed that assessee-company has debited an amount of ₹ 1,84,81,375/- towards adv .....

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assessee has claimed depreciation at 5.24 Crores on WDV of 6.32 Crores which is 83% of the WDV. However, in para 3.5, he records that assessee claimed huge depreciation of 6.40 Crores on WDV of Fixed Assets shown as ₹ 8.62 Crores. Vide para 3.8, Item 'e', AO records further as under: "e. Depreciation: Assessee had claimed depreciation of ₹ 45,83,501 on WDV of computers shown at ₹ 1,06,98,740/- and ₹ 5,24,63,530/- on WDV of software and hardware shown at S .....

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s disallowed and added". 6. Assessee contested before the Ld.CIT(A) that the disallowance is not correct, but Ld.CIT(A) in his wisdom confirmed the disallowance as he has relied on the Inspector's report extracted by the AO as under: "9.2 I have considered carefully the arguments and facts in this case. The fundamental issue, even before consideration of particular Block of Assets is the existence of the asset. An asset cannot enter a block, if its very existence is not there. The .....

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me filed along with return of income to submit that assessee's P&L A/c indicate a loss of an amount of ₹ 9,76,12,872/-. From there, assessee has added back i.e., reduced the depreciation claim of ₹ 5,79,60,459/- and filed net loss of ₹ 3,96,52,413/-. Since, assessee has not claimed any depreciation on the assets, question of disallowing depreciation does not arise. Therefore, the ground to that extent is to be allowed. 8. On verification of computation of income filed a .....

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arise on the facts of the case, we agree with assessee's contentions and direct the AO to delete the addition so made. Ground No. 9 is accordingly, allowed. 9. Ground No. 2: AO noticed that assessee has disallowed an amount of ₹ 1,84,81,375/- towards advances which include capital goods. The entire amount was disallowed as the capital loss. It was the contention that there are certain trade advances also which required to be allowed and that entire amount cannot be disallowed. In the .....

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given to assessee to substantiate the claims made in the return of income / P&L A/c. Assessee is directed to furnish necessary details to AO and AO to examine whether the amounts can be allowed as write off as per the provisions of the Act. With this, Ground No.2 is considered allowed for statistical purposes. 10. Ground No. 3 is with reference to treating an amount of ₹ 19,11,589/- unsecured loans as income u/s. 68. In the absence of any confirmation for increase in the unsecured loa .....

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ls. Here also Ld. Counsel pleaded that assessee can furnish necessary details before the AO. In view of this, this ground is restored to the file of AO to examine the nature of credit and treat accordingly as per the provisions of law and facts. This ground is allowed for statistical purposes. 11. Ground No. 4 is also with reference to disallowance of an amount of ₹ 31,34,838/- towards advances written off being capital in nature. This ground is also similar to the issue in Ground No.2 dis .....

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