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Commissioner of Income Tax-7 Versus M/s. Sonic Biochem Extractions Pvt. Ltd.

2015 (12) TMI 112 - BOMBAY HIGH COURT

Eligibility to claim depreciation in respect of plant & machinery of discontinued business - ITAT allowed claim - Held that:- The refining machinery was a part of the block of assets of plant and machinery. In such a case depreciation is granted to the entire block of assets whether or not an individual item therein has been used during the subject assessment year. In support the impugned order placed reliance upon its decision in the case of DCIT Vs. Boskalis Dredging India (P) Ltd. (2012 (8) T .....

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becomes a part of the block of assets for the first time. In the circumstances the respondent's appeal was allowed and the disallowance of depreciation was deleted. - Decided in favour of assessee.

Disallowance of "loss due to fire" - Held that:- Tribunal by the impugned order correctly accepted the respondent's contention that the amount returned as loss was revenue in nature as the amount claimed and not granted by the Insurance Company was expenditure for repair of factory Buildin .....

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to be allowed under Sections 31 and 32 of the Act cannot be faulted.- Decided in favour of assessee.

Upholding the method adopted by the assessee to devalue the closing stock - Held that:- We find that the entire exercise of devaluation of stocks is essentially a question of fact and before us the same is not urged as being perverse. The Revenue is contending that it is contrary to Section 145A of the Act. However nothing is shown to us in support of its contentions. Devaluation of s .....

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Decided in favour of assessee. - Income Tax Appeal No. 2088 of 2013 - Dated:- 17-11-2015 - M. S. Sanklecha And G. S. Kulkarni, JJ. For the Appellant : Mrs. S. V. Bharucha For the Respondent : Mr. K. Shivram, Sr. Counsel a/w. Mr. Rahul Hakani ORDER P. C. 1. This appeal by the Revenue under Section 260A of the Income Tax Act, 1961 (Act) challenges the order dated 20.03.2013 passed by the Income Tax Appellate Tribunal (Tribunal). The impugned order relates to the Assessment Year 2005-06. 2. The app .....

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he case the Tribunal was correct in holding the plant and machinery of discontinued business, which is not likely to be revived, in a block of asset with written down value is eligible for claim of depreciation? (c) Whether on the facts and circumstances of the case the Tribunal is justified in setting aside the issue of assessee's claim of "loss due to fire" to the file of the Assessing Officer without properly appreciating the fact that the loss is attributable to the fixed asset .....

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n its business of refining edible oil. The machinery had not been used during the assessment year as the respondent has discontinued its business of refining edible oil. The above depreciation was claimed on the block of assets on the written down value including the refining edible oil machinery. The Assessing Officer disallowed the claim of depreciation on the ground that one of the twin requirements of ownership and user under Section 32(1)(ii) of the Act viz. user was not satisfied. (b) On a .....

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se depreciation is granted to the entire block of assets whether or not an individual item therein has been used during the subject assessment year. In support the impugned order placed reliance upon its decision in the case of DCIT Vs. Boskalis Dredging India (P) Ltd. 53 SOT 17 (Mum) wherein it has been held that once the concept of block of assets was brought into effect from assessment year 1989-90 onwards then the aggregate of written down value of all the assets in the block at the beginnin .....

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at the issue arising herein is identical to the issue which arose before the Tribunal in Boskalis Dredging India (supra) where also the dredger concerned was a part of the block of assets and not put to use. On instructions, she further states that the Revenue has accepted the decision of the Tribunal in Boskalis Dredging India (supra) which the impugned order has merely followed. No distinguishing feature in the present facts has been pointed out which would warrant taking a different view. Bes .....

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to any substantial questions of law. Accordingly not entertained. 4. Re:question No.(c) (a) During the subject assessment year there was fire in the chemical plant of the respondent at Pithampur. The respondent had debited an amount of ₹ 21.68 lacs in its profit & loss account as loss due to fire. This was the difference between the amount claimed for repairs due to fire from the Insurance company and that granted. The Assessing Officer disallowed the loss claimed to the extent of S .....

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d Plant & Machinery. This expenditure as repairs was allowable as revenue under Sections 30 and 31 of the Act in principle. In the circumstances the impugned order of the Tribunal set aside the order of the Commissioner of Income Tax (Appeals) and restored the issue to the Assessing Officer to examine whether the expenditure claimed was incurred for repairs of Building and Plant & Machinery affected by the Fire. (c) We are informed at the Bar that consequent to the impugned order of the .....

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uestion of law. Therefore question No.(c) is not entertained. 5. Re:question No.(d) (a) During the subject assessment year the respondent assessee had debited an amount of ₹ 14.25 lacs in the profit and loss account as devaluation of closing stock. This resulted in the closing stock being devalued from ₹ 14.26 lacs to ₹ 1. This devaluation of a part of its closing stock was in respect of packing material which were used for goods which were non moving items. This resulted in th .....

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