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2016 (1) TMI 945 - DELHI HIGH COURT

2016 (1) TMI 945 - DELHI HIGH COURT - TMI - Depreciation on the de-capitalized assets on the written down value ('WDV') basis on the block of assets in terms of Section 43(6) (c) - itat allowed the claim - as per revenue some of the assets had been converted into stock-in-trade at nominal value - Held that:- As noted by the ITAT this method of de-capitalising assets which have ceased to be of utility has been consistently followed by the Assessee. The Revenue has been unable to demonstrate how t .....

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ct of certain types of sales made - Held that:- The change in the accounting policy is required to be satisfactorily explained by the Assessee and there has to be a consistency in adopting such a change. It is not the Revenue's case that the above change of accounting policy is not a bona fide. It is consistent with Accounting Standard 9 issued by the Institute of Chartered Accountants of India. The explanation for the change has been furnished by the Assessee as part of its audited accounts. It .....

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is directed against the order dated 12th December 2014 passed by the Income Tax Appellate Tribunal ('ITAT') in ITA No. 5389/Del/2011 for the Assessment Year (AY) 2007-08. 2. The first issue projected by the Revenue concerns the acceptance by the ITAT of the Assessee's case for allowing depreciation on the de-capitalized assets on the written down value ('WDV') basis on the block of assets in terms of Section 43(6) (c) of the Act notwithstanding that some of the assets had be .....

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DV is valued at ₹ 100 is de-capitalized and valued at ₹ 1, depreciation on the remaining ₹ 99 shall continue to be allowed even though the asset does not physically exist in the block of assets. 4. The case of the Revenue is that none of the conditions envisioned under Section 43(6) (c), i.e., reduction of the block of assets on account of some portion thereof being sold, discarded, demolished or destroyed is fulfilled in the instant case and therefore the question of continuin .....

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of utility has been consistently followed by the Assessee. The Revenue has been unable to demonstrate how the Revenue's interest is adversely affected thereby or if there is any escapement of income from assessment. On the other hand if indeed the profit as a result of subsequent sale of the asset is offered to tax, there cannot be any prejudice to the Revenue. Consequently, this Court finds no reason to disagree with the reasoning or conclusion of the ITAT in this regard and therefore is no .....

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d as goods are despatched to the customers and upon endorsement of title to the goods. Revenue from sale of goods with a conditional clause on installation is recognized on completion of installation and acknowledgement by the customer. Sales are recorded at invoice value, net of trade discount, sales taxes, returns, but includiong excise duties. Revenue from maintenance services is recognized as and when the services are actually rendered. Revenue from rental of machines is recognized on a time .....

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