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2015 (11) TMI 987 - ITAT MUMBAI

2015 (11) TMI 987 - ITAT MUMBAI - TMI - Depreciation on Plant & Machinery, Furniture & fixtures, Office equipments - addition made during the year between as per block of assets as per companies Act and block of asset as per Income Tax Rules - Held that:- We have observed that assessee has claimed depreciation on furniture & fixture of ₹ 67,98,208/- in distillery & chemical division and furniture & fixture of ₹ 40,65,104 in sugar division and has claimed lower depreciation while merg .....

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nked to the capital subsidy of ₹ 167.30 lacs and thus we find no reasons to interfere with the orders of authorities below and the same is hereby affirmed. - Decided against assessee.

Additional sugar cane price assessee claimed on the basis of purchase of sugar cane - Held that:- We hold that assessee is following the mercantile system of accounting. Assessee is entitled for the claim of expense on Revenue/trading account on crystallization of the law. In the said amount in ass .....

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dditional claim should be allowed only in assessment year 2005-06 subject to verification and checking by the authorities below and hence the claim of assessee for impugned year is rejected. - Decided in favour of assessee by way of remand.

Deduction u/s 80HHC - Held that:- A decided in case of Ajanta Pharma Ltd. Vs. CIT [2010 (9) TMI 8 - SUPREME COURT] If the dichotomy between "eligibility" of profit and "deductibility" of profit is not kept in mind then section 115JB will cease to b .....

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to the conditions specified in sub-sections (4) and (4A) of that section] to obliterate the difference between "eligibility" and "deductibility" of profits as contended on behalf of the Department. - Decided in favour of assessee. - ITA No. 2220/Mum/2010 - Dated:- 21-10-2015 - Amit Shukla, JM And Ramit Kochar, AM For the Petitioner : Shri Vipul Joshi & Shri Nishit Gandhi For the Respondent : Shri Vikash Kumar Agarwal ORDER Per Ramit Kochar, Accountant Member This appeal by the assessee is d .....

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at the CIT (A) ought to have properly considered and appreciated the explanation rendered by the Appellants. 2. The Ld. CIT (A) has dismissed the Appellants' claim by disallowing ₹ 4,00,200/- representing the amount paid as stamp fees for the agreement pertaining to the Co- Gen project in respect of the agreement entered into for US grant/aid. 3. The CIT (A) erred in confirming of charging of ₹ 19,37,524 under Sec. 41 m respect of sundry credit balance written off by the Appellan .....

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ng the Appellants' claim u/s 80HHC Considering the Assessee's income as assessed under book profit u/s 115JB. The Ld. CIT (A) has erred in following formulations in the case of CIT vs Ajanta Pharma (223 ITR 441 (2009) (Bombay)." 2. Ground No. 1 is regarding depreciation of ₹ 417784/- on depreciation on account of addition made during the year between as per block of assets as per companies Act and block of asset as per Income Tax Rules. 3. It was observed by the Assessing Offi .....

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ition made (Rs.) Sugar Plant & Machinery 651.29 Plant & Machinery 67402311 Chemical Furniture & fixture 49.32 Furniture & fixture 6798026 74200519 4. In reply the assessee submitted that in books of accounts addition to office equipment of ₹ 22,63,535/- was considered under "Furniture" while for the claim under the Income Tax Rules, the same is considered as "Machineries". The AO observed that the assets like ceiling fans, fire extinguisher, AC etc. Asse .....

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e in furniture and fixture of ₹ 1,86,620/- @ 10% (i.e. more than 180 days) depreciation works out to ₹ 1,86,620/-. Thus, the total depreciation on the difference of plant & machinery and furniture works out to ₹ 4,70,784/-. Accordingly, the same is disallowed and deducted from the total depreciation claimed." 5. Aggrieved, the assessee carried the matter in appeal before CIT(A). 6. The assessee submitted before the CIT(A) that the difference in plant & machinery ha .....

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64 673.93 Chemical division Furniture & Fixture Less : Plant & Machinery as per I.T. Act 49.32 49.32 (-) 22.63 (A) 49.32 26.69 Sugar Division Office Equipment (Not considered by AO) 0 18.65 Chemical Division Office Equipment (Not Considered by the AO) 0 22.64 (B) 0 41.29 (A)+(B) 67.98 7. The CIT(A) rejected the contention of the assessee and confirmed the addition. 8. Aggrieved by the order of CIT(A), the assessee is in appeal before us and filed the reconciliation statement as under:- D .....

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niture & Fixtures Office Equipment 1,69,19,000 2,45,000 1,94,000 2,72,67,807 9,39,152 [25% & 12.5%] [10% & 5%] Total 1,73,58,000 2,82,06,959 Sugar Division Additions to fixed assets during the previous year [To the extent of the difference that is relevant for the appeal] Addition on account of As per book [In Rs.] As per Income Tax [In Rs. ] Agriculture Machinery Plant & Machinery Furniture & Fixtures Office Equipment 10,000 6,51,29,000 18,02,000 22,64,000 (General) 6,37,89, .....

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furniture & fixture of ₹ 49,32,000/- as per books while office equipment of ₹ 18,66,000 in the distillery and chemical division while as per Income Tax Act, the same is treated as furniture & fixtures of ₹ 67,98,208/-. The assessee submitted that the asessee has claimed depreciation correctly in the Income Tax Act as per the treatment and no prejudice is caused to the Revenue and assessee has claimed less depreciation under the Income Tax Act because the furniture & .....

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s claimed lower depreciation @ 10% on furniture & fixture under the Income Tax Act while depreciation of plant & machinery @ 25% under the Income Tax Act and hence lower depreciation has been claimed and no prejudice is caused to the Revenue. 10. Ld. DR on the other hand relied upon the order of authorities below. 11. We have considered the rival contention and carefully perused the relevant material on record. We have observed that assessee has claimed depreciation on furniture & fi .....

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ich was disallowed by the AO by considering the same to be capital expenditure as the grant of ₹ 167.30 lac received by the assessee has been considered as capital receipt. 13. The assessee carried the matter in appeal before CIT(A) and submitted that the stamp fee has been incurred for getting a substantial benefit for the business and should not be disallowed only because the amount of benefit is on capital account. He relied upon the Judgment of Hon'ble Supreme Court in the case of .....

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neration project and the same should be allowed as it is a business expense. The assessee relied upon the Judgment of Hon'ble Supreme Court in the case of CIT Vs. General Insurance Corporation 286 ITR 232 (SC) and the Judgment of Hon'ble Bombay High Court in the case of CIT Vs. Cinecita (P.) Ltd. 137 ITR 652 (Bom.) 16. Ld. DR submitted that these are capital expenditure which is linked towards the executing of the agreement for capital subsidy and hence the same has rightly been disallow .....

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Supreme Court in the case of CIT Vs. General Insurance Corporation (supra) which relates to stamp duty paid for increase in authorized capital pursuant to the bonus shares which was held to be the revenue expenditure because the bonus shares does not entail any increase in capital which only relates to the capitalization of existing profits and hence was held to be revenue expenditure by the Hon'ble Supreme Court. Similarly the Judgment of Hon'ble Bombay High Court in the case of CIT Vs .....

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,524/- u/s 41 in respect of sundry credits balance written off by the appellant unilaterally. 19. At the outset, the Ld. AR of the assessee submitted that the assessee does not wish to press the grounds of appeal no. 3 and, therefore, the same is hereby dismissed as not pressed. 20. Ground no. 4 relates to the additional sugar cane price of ₹ 1,14,59,037/- which the assessee has claimed on the basis of purchase of sugar cane. 21. The assessee submitted that the assessee is in the business .....

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ion and paid in books of account @ 8.14 per MT. The final price of the season 2001-02 was decided vide MOU with Cane Growers Association and on the basis of the same, vide Internal Order dated 6/9/2014 the final balance price works out as under:- Season Previous Year A.Y Quantity Rate per QTL Amount (Rs.) 2001-02 20.09.01 to 31.3.02 2002-03 10,41,730,.658 11.00 1,14,59,037.24 22. In the return for assessment year 2004-05, the assessee had made claim for the said additional cane price. However, t .....

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dditional sugarcane of ₹ 1,14,59,037.24/-. Holding that assessee has not claimed these expenses in return of income and no provisions has been made in books of account, this claim made before the CIT(A) as additional ground of appeal as the AO has also rejected the claim of the assessee for assessment year 2004-05. The CIT (A) observed that assessee is claiming these expense on the basis of agreement with the sugarcane grower association vide ………..order dated 06.09.200 .....

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06, the CIT(A) presumed that it should be allowed in assessment year 2006-07. Assessee submitted that it has filed a rectification application u/s 154 before the CIT(A) for assessment year 2005-06 which is still pending. It was also submitted that his claim got crystallized in assessment year 2005-06 and hence should be allowed. 24. On the other hand, Ld. DR submitted that it needs to be verified that this be not allowed more than once as assessee is making claim in assessment year 2002-03, 2004 .....

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fide and genuineness of the claim. The authorities below are also directed to verify that the assessee's claim is allowed not more than once. The assessee has claimed that this amount in assessment year 2002-03, 2004-05, 2005-06 and 2006-07. Subject to above verification additional claim should be allowed only in assessment year 2005-06 subject to verification and checking by the authorities below and hence the claim of assessee for impugned year is rejected. 26. Ground no. 5 relates to clai .....

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(which reads as "subject to the conditions specified in that section"), it becomes clear that the amount of profits eligible for deduction under section 80HHC, computed under clause (a) or clause (b) or clause (c) of sub-section (3) or sub-section (3A), as the case may be, is subject to the conditions specified in that section. According to the Department, the assessee herein is trying to read the various provisions of section 80HHC in isolation whereas as per clause (iv) of Explanati .....

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tment, both "eligibility" as well as "deductibility" of the profit have got to be considered together for working out the deduction as mentioned in clause (iv) of Explanation to section 115JB. We find no merit in this argument. If the dichotomy between "eligibility" of profit and "deductibility" of profit is not kept in mind then section 115JB will cease to be a self-contained code. In section 115JB, as in section 115JA, it has been clearly stated that the .....

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