TMI Blog2012 (4) TMI 685X X X X Extracts X X X X X X X X Extracts X X X X ..... 43B at ₹ 6650482.00 towards excise duty payable on finished goods. Ground 1[ii] relates to disallowance made u/s 43B at ₹ 120816.00 in respect of sales tax . Ground 1[iii] relates to upholding disallowance of depreciation of ₹ 3012926.00 , and Ground 1[iv] relates to upholding disallowance made u/s 14A amounting to 394537.00 At the very outset the ld counsel appearing for the appellant stated that he is not pressing ground 1[ii] relating to the disallowance in respect of unpaid sales tax at ₹ 120816.00, how ever we notice that the amount contested in ground No.1[i] includes unpaid sales tax also. Accordingly to keep the facts in appeal straight we dismiss ground No.1[ii] as the appellant is not pressing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wed in AY 2001 02 i.e, the initial year of depreciation on intangible assets therefore, the issue has attained finality and no interference is called for on this issue. AO was not convinced by this submission and added the difference between the two at ₹ 3012926.00 as excess depreciation claimed. Lastly the AO disallowed ₹ 394537.00 out of the interest claimed by the assessee u/s 14A read with rule 8D of the I.T Act. 5. Aggrieved by the order of the AO , assessee took the matter before the CIT[A]. The Ld CIT[A] has dealt the issues as under. 5a] Regarding the claim of depreciation vis-a`-vis depreciation allowed by the AO , The ld CIT[A] found that for the claim of depreciation on certain expenditures capitalised by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ld AR raised an additional plea and submitted that provisions of sec 43B are not at all applicable on the facts of the case because the liability for the excise duty found credited in the balance sheet has not arisen as the goods are lying in the factory premises and excise duty is payable only when the goods are cleared from the factory premises, where as provisions of sec 43B are applicable on un paid statutory liability but in the instant case the statutory liability has not at all arisen, therefore invoking provisions of sec 43B is bad in law as well on facts. To substantiate his submission ld counsel drew our attention to the decision of the Hon ble Jurisdictional High Court of Bombay in the case of Commissioner of Income-tax v. L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sugar. In the assessment year 2001-02 the Assessing Officer held that the excise duty on sugar manufactured but not sold and lying in closing stock was a liability incurred by the assessee under section 145A(b) and had to be considered for disallowance under section 43B of the Act. The Tribunal deleted the addition. On appeal to the High Court : BHeld,_ that the manufactured sugar was lying in stock and was not cleared from the factory. Therefore, the Tribunal was justified in holding that in respect of the unsold sugar lying in stock, Central excise liability was not incurred and consequently the addition of excise duty made by the Assessing Officer to the value of the excisable goods was liable to be deleted. [Bold letters by us ] 8. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO allowed depreciation on the amount of capitalisation of expenditure and deprecation on intangible assets have been allowed in scrutiny assessments since AY 2001 02 , which means that the depreciation was actually allowed as per the provisions of the Act. Ld counsel further submitted that though as per the tax audit report for the year under consideration depreciation has been provided at ₹ 10746368.00, but the same has been claimed while computing the income as per the provisions of the income tax act at ₹ 13759294.00, therefore, there is a difference in the amount of depreciation as per audit report and as per computation of income to the tune of ₹ 3012926.00. Ld counsel concluded that since the depreciation has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isallow the deprecation on the above mentioned assets. Be as it may. The undisputed fact is that the depreciation of the initial year has not been disturbed which view is also supported by the ratio laid down by the Hon ble Delhi High Court [ supra ] There fore we direct the assessing officer to allow the depreciation as claimed by the appellant thereby reversing the order of the ld CIT[A] on this issue. Ground No.1[iii] is allowed . 12. For issues raised through ground No.1[iv], Ld counsel for the appellant submitted that the disallowance of interest to the tune of ₹ 394537.00 invoking sec 14A r.w rule 8D is against the law as rule 8D is applicable from 01.04.2007 and it is prospective and further submitted that the AO has grossly ..... X X X X Extracts X X X X X X X X Extracts X X X X
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