TMI Blog2015 (7) TMI 1117X X X X Extracts X X X X X X X X Extracts X X X X ..... ing from the record, the AO has not disputed the completion of 300 days of employment by these new regular workmen employed by the assessee during the earlier two years and therefore, once the said condition is satisfied, the condition of continuity in employment does not emanate from the provisions of section 80JJAA of the Act. Accordingly, we do not find any reason to interfere with the impugned order of the CIT(A) qua this issue. Depreciation claimed on the assets purchased - w.d.v. in the books of the seller is a tangible material before the AO on the basis on which the AO has determined the actual cost of the asset to the assessee - Held that:- Where the assessee acquired an asset which was used by other person for the purpose of business or profession and in such a case if, the AO is satisfied that the main purpose of transfer of the asset directly or indirectly was the reduction of liability to income tax than the actual cost to the assessee shall be the amount which is determined by the AO having regard to all the circumstances of the case. In the case in hand, the AO did not undertake any exercise of examination of the valuation report produced by the assessee or to det ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 38,72,178 11,61,653 2005-06 50,38,040 15,11,412 2006-07 87,92,125 26,37,638 53,10,703 4. The AO noted that as per the auditor report in form no.10DA it is certified that deduction to be claimed by the assessee in respect of AY;2007-08 ₹ 26,37,638/- while the assessee actually claimed the deduction of ₹ 53,10,703/-. Thus, the AO found that the assessee computed the deduction of 30% of additional wages paid in the preceding two years was also claimed. The AO observed that this working and interpretation of Section cannot be accepted. The AO was of the view that the wages paid in the relevant previous years was alone to be taken into consideration but not the wages paid in the preceding year for computing the deduction allowable in this year. The AO was of the view that if the new workmen employed during earlier two years continue in this year, the wages paid to them constitute additional wages and qualify for deduction in this year. Thus, the AO did not agree with the claim o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed during the last two years were not in the employment of the assessee during the year under consideration. However, the assessee has claimed the deduction of 30% of additional wages paid to those workers in the preceding two years and not during the year under consideration. The AO had disallowed the claim of the assessee of deduction of 30% of additional wages which was not paid during the year under consideration. He has forcefully contended that the spirit of section is to allow the deduction against additional wages paid to the new workmen during the year under consideration. If the claim of the assessee is accepted, the deduction on account of additional wages would be allowed in respect of the number of workmen which would be morethan the additional number of regular workmen in the year under consideration. Thus, learned DR contended that the CIT(A) has committed an error in allowing the claim of the assessee which is against the spirit and scheme of the provisions of section 80JJAA. He has relied upon the order of the AO. 6. On the other hand, learned AR submitted that the AO has not disputed that the additional wages paid by the assessee in the earlier two years in res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing or amalgamation with another industrial undertaking; b) unless the assessee furnishes along with the return of income the report of the accountant, as defined in the Explanation below sub-section(2) of section 288 giving such particulars in the report as may be prescribed. Explanation - For the purposes of this section, the expressions; i) additional wages means the wages paid to the new regular workmen in excess of one hundred workmen employed during the previous year; Provided .that in the case of an existing undertaking, the additional wages shall be nil if the increase in the number of regular workmen employed during the year is less than ten percent of existing number of workmen employed in such undertaking as on the last day of the preceding year; ii) regular workmen does not include- a) a casual workmen; or b) a workman employed through contract labour; or c) any other workman employed for a period of less than three hundred days during the previous year: iii) workman shall have the meaning assigned to it in clause(s) of section 2 of the industrial Dispute Act, 1947 (14 of 1947). 8. The aforesaid provision wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The provisions of fiscal statute are required to be strictly interpreted as per the language employed in the section. There is no scope of reading something into the provisions of fiscal statute therefore, even if there is a lacuna in the drafting or language of the provision the same has to be rectified by the legislation. Thus, going by the plain language of the provision of section 80JJAA of the Act, it cannot be interpreted that for availing deduction under the said section on account of additional wages paid to new regular workmen employed for three assessment years commencing from the assessment year relevant to the previous year in which such employment is provided such workmen should continue in the employment for all the three years. The only condition provided under the explanation being the regular workmen that the workmen should be employed for not less than 300 days during the previous year. Therefore, the expression additional wages paid to new workmen employed by the assessee in the previous year is the criteria to be fulfilled and to be tested in the first year of the claim of deduction and once deduction is allowable in the first year then, 30% of such additional ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hase of the machinery in comparison to the written down value(w.d.v.) in the books of M/s treason Apparels Pvt.Ltd and accordingly, the AO invoked the explanation 3 to sec.43(1) and adopted the cost of the fixed assets purchased by the assessee at ₹ 1,66,24,735/- being the W.D.V in the hand of the seller company. Accordingly, the AO disallowed the depreciation on the balance amount of ₹ 55,57,222/-. The assessee challenged the action of the AO before the CIT(A), but could not succeed. 12. Before us, learned AR of the assessee submitted that valuation of the fixed asset is based on valuation report dated 20-03-2007 of M/s Kulkarni Associates, charter Engineers and approved valuer. The valuation was carried out by the professional valuer after taking into due consideration of depreciation, working condition of machine and replacing value. The machineries were sold to the assessee at the value arrived at by the approved valuer, therefore, there is nothing on record to show that the purpose of transfer of these assets to the assessee was to reduce liability of the income-tax by claiming depreciation. The learned AR has further contended that the AO has simply adopte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of such assets, directly or indirectly to the assessee, was the reduction of a liability to income- tax (by claiming depreciation with reference to an enhanced cost), the actual cost to the assessee shall be such an amount as the 6 Assessing] Officer may, with the previous approval of the 7 Deputy] Commissioner, determine having regard to all the circumstances of the case. 15. The above explanation stipulates the situation where the assessee acquired an asset which was used by other person for the purpose of business or profession and in such a case if, the AO is satisfied that the main purpose of transfer of the asset directly or indirectly was the reduction of liability to income tax than the actual cost to the assessee shall be the amount which is determined by the AO having regard to all the circumstances of the case. In the case in hand, the AO did not undertake any exercise of examination of the valuation report produced by the assessee or to determine the actual cost of the assets to the assessee. The AO has simply adopted the w.d.v. of the assets in the books of the seller being the actual cost to the assessee and consequently, restricted the claim of depreciatio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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