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M/s Ajmer Vidyut Vitran Nigam Ltd. Versus Assistant Commissioner of Income Tax, Circle-2, Ajmer and Vica-Verssa and Deputy Commissioner of Income Tax, Circle-2, Ajmer. Versus M/s Ajmer Vidyut Vitran Nigam Ltd.

2016 (9) TMI 399 - ITAT JAIPUR

Entitlement depreciation on the written down value of the assets to Rajasthan State Electricity Board - Held that:- As per the balance sheet of the Rajasthan State Electricity Board, the allowable depreciation up to 19/7/2000 was mentioned as ₹ 1,04,82,30,121/-. Since block of assets were transferred to the assessee, therefore, the insistence of the ld Assessing Officer for physical verification of the assets for the purposes of depreciation, in our view, was not warranted. In our view, on .....

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43(1) - Held that:- A bare reading of the Explanation 10 of Section 43 of the Act, which clearly provides that where a portion of the cost of an asset acquired by the assessee has been met directly or indirectly by the Central Government or a State Government in the form of a subsidy or grant or reimbursement, then, so much of the subsidy or grant or reimbursement shall not be included in the actual cost of the asset to the assessee. Admittedly, the amount has been received by the assessee in t .....

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the assessee as well as the order passed by the Advance Rulings in the matter of Jodhpur Vidyut Vitran Nigam [2009 (11) TMI 20 - AUTHORITY FOR ADVANCE RULINGS] which is situated on the same pedestal as that of the assessee, have been accepted by the revenue and the revenue has not insisted for application of provisions of MAT U/s 115JB of the Act. Therefore respectfully following the order passed by the Advance Rulings (Income Tax), New Delhi and applying the same to the present facts and circum .....

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009, ITA No. 390/JP/2009, ITA No. 549/JP/2009 - Dated:- 14-7-2016 - SHRI BHAGCHAND, AM & SHRI LALIET KUMAR, JM For The Assessee : Shri Sunil Porwal and Shri Shubhash Porwal (CA) ORDER PER: BENCH These are the cross appeals, one by the assessee and another by the revenue arise against the orders dated 05/03/2009 and 09/04/2009 passed by the ld CIT(A), Ajmer for the A.Y. 2002-03, 2003-04 and 2006- 07, wherein the effective grounds of assessee as well as revenue s appeals are reproduced as unde .....

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ons of MAT (sec. 115JB of Income Tax Act, 1961) are also not applicable. Further alternatively the quantum of depreciating considered for disallowance should also be considered as per books as claimed and not as per Income Tax returns/rates. 5. That further in view of decision of M/s Kwality Biscuits Ltd. Vs. CIT (284 ITR 434 (SC) charging of interest U/s 234B on MAT tax is also bad in law. Grounds of revenue s appeal (ITA No. 385/JP/2009 A.Y. 2002-03):- In view of the facts and circumstances of .....

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lidity of issue of notice U/s 147/148. 2. Disallowance the depreciation of ₹ 16,20,20,005/- on non existing assets. 3. Disallowance of depreciation of ₹ 17,75,49,581/- U/s 43(1) explanation 10 of Income Tax Act. 4. That further under the given circumstances the provisions of MAT (sec. 115JB of Income Tax Act, 1961) are also not applicable. Further alternatively the quantum of depreciating considered for disallowance should also be considered as per books as claimed and not as per Inc .....

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ct which is to be taken for calculation of book profit U/s 115JB. Grounds of assessee s appeal (ITA No. 390/JP/2009 A.Y. 2006-07):- Under the facts and the circumstances of the case the ld CIT(A), has erred in making the full additions/actions confirmed:- 1. Disallowance the depreciation of ₹ 4,10,11,314/- on non existing assets. 2. Disallowance of depreciation of ₹ 15,24,53,227/- U/s 43(1) explanation 10 of Income Tax Act. 3. That further under the given circumstances the provisions .....

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e case, the Ld. CIT(A), Ajmer has erred in : 1. Deleting the disallowance of ₹ 9,32,66,120/- on account of prior period expenses. 2. Restricting the disallowance of ₹ 15,24,53,227/- on non existing assets as against disallowance of ₹ 37,77,40,749/- made by the A.O. U/s 43(1) of the I.T. Act which is to be taken for calculation of book profit U/s 115JB. 2. All the appeals are being heard together, therefore, for the sake of convenience, a common order is being passed. 3. Ground .....

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- We have heard the ld. DR and perused the written submissions by the assessee placed on record. The objection of the A.O. is that no physical existence of the fixed assets worth ₹ 115.21 crore is available and amount of ₹ 6.95 crore has been capitalized in the current year. The explanation of the assessee is that the assessee took the assets through Financial Restructuring Plan as on and were basis and fixed assets register of the assessee is under consideration of being completed. .....

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sideration the list of the fixed assets prepared on physical verification and examine whether any loss of fixed assets is there and if it is so, necessary entries as per provisions of the laws with respect to the fixed assets should be passed and depreciation should be allowed in accordance with law. If the list/fixed asset register on account of physical verification of assets is not found ready in the impugned year, then necessary entries, if required for loss of fixed assets, if any be passed .....

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der:- Considering the all material facts of the case and discussion made as above, I am of the view that the assessee is not entitled to take benefit of the Hon ble ITAT s order dated 20/06/2008 for the reason that the assessee has failed to submit list of assets as claimed physically verified vide certificate submitted before the department on 05/11/2008. In certificate the assessee has claimed that the fixed assets of M/s A.V.V.N.L. have been physically verified at all the circles by the Circl .....

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mpany, Page 29 (10)(B) of the Statutory Audit Report filed alongwith the return, wherein it is reported that the fixed assets of ₹ 115.21 Crore transfer through FRP was physically not available at the Head Office Location From the above discussion, it is clear that the assessee has submitted a certificate before the A.O. stating that the company has physically verified all its assets, however, not produced list of fixed assets prepared on physical verification as directed by the Hon ble IT .....

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opted by the assessee I am inclined to add the depreciation as calculated above by the A.R. ₹ 16,20,20,005/- to the total income of the assessee. Thus, looking the past history of the case addition of ₹ 16,20,20,005/- is hereby made against non existing assets as mentioned above. 6. Being aggrieved by the order passed by the ld Assessing Officer, the assessee carried the matter before the ld CIT(A), who had confirmed the addition by observing as under:- 3.3 In Annexure-I to the audit .....

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ication of the assets could be done. The detail of the same is maintained by RVPN Limited. For the assets created during the year the company is obliged to maintained fixed assets register which has not been maintained. Hence, we are not in a position to comment as regards discrepancies if any in relation to the physical existence of the assets and its book value. No physical existences of the assets at Head Office for an amount of ₹ 115.21 crores as transferred from FRP as also of ₹ .....

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s regard are as follows:- "A block assets register indicating the details on yearly basis has been in existence in erstwhile RSEB. The exercise for preparation and maintenance of detailed assets register in desire format has since been taken in hand after formation of the company on unbundling of RSEB. As the preparation of fixed assets register thorough the consultant appointed for the purpose is in progress a committee of company officials has also been looking after the work. These amoun .....

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, it was not possible for the AO to verify whether the claim of the appellant is correct or not. I, therefore, hold that the AO has rightly made the disallowance of ₹ 16,20,20,005/- and the same is confirmed. Ground No.1 is thus dismissed. 7. Now the assessee is in appeal before us. The ld AR of the assessee has submitted that the assessee company was incorporated on 19.04.2000 as per Rajasthan State Extra Ordinary Gazette Dated 18.01.2002 whereby for Rajasthan Power Sector Reforms Transfe .....

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orth ₹ 115.21 crore was also transferred through FRP (Financial Restructuring Plan being on account of Capitalization of interest & financial charges amount on fixed assets value). Ld AR further submitted that the statutory auditor for the financial year 2002-03 (asst, year 2003-04) of the company, page 29(10)(B) of the Statutory Audit Report filed along with the return, wherein it is reported that "the fixed assets of ₹ 115.21 crore transfer through FRP was physically not a .....

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situation and has commented as below. "It appears that list of fixed assets on physical verification is yet to be finalized by the assessee. It is not the depreciation only which has the effect but the necessary entries, if required for loss of fixed assets have also to be passed. There is nothing any record in this respect: therefore, it is pre-mature for the A.O. to disallow depreciation in the absence of any thing on record that the assets are not used for the purpose of the assessee. Th .....

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oss of fixed assets, if any be passed in the year I which it is ready and allow depreciation accordingly. In such situation the AO cannot disturb depreciation in the impugned year. The matter is restored to the file of the AO for fresh adjudication but after providing the adequate opportunities of being heard to the assessee." Thus the directions of Hon'ble ITAT on the issue for A.Y. 2003-04 were very specific that the disallowance of depreciation can be made only on those fixed assets .....

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even the ITAT has accepted the block of fixed assets however they have directed to disallow the depreciation only on those assets which for loss of asset claimed in the books. The assessee Company submitted the certificate of verification of fixed assets of all circles by CSE and the same cannot be denied. It is worth to note that as per Audited Accounts & as per Statutory Auditors Report it is clear that no "Loss of Fixed Assets" are there. Further as per section 32 of Income Tax .....

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tion for disallowance of depreciation. Even no opportunity granted to justify the doubt when the certificate clearly mentions for verification of fixed assets and no loss there in booked in accounts. Further the assets were allocated by the State Government from erstwhile RSEB and its existence in a Government owned company cannot be doubted. Further even the Statutory Auditors in its report has mentioned for no loss of fixed assets. Thus the depreciation as disallowed for the year based on asse .....

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r on 16/6/2016. During the course of hearing, it was submitted on behalf of the assessee that the erstwhile Rajasthan State Electricity Board was not assessable to income tax and therefore, it was not filing the income tax return. However, thereafter on going through the record and the judgment passed by the Hon'ble High Court and Hon'ble Supreme Court, it transpires that the Rajasthan State Electricity Board is an taxable entity and therefore the matter was fixed for hearing on 29/6/201 .....

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tax Act, 1922 (XI of 1922), 4 the Board shall be deemed to be a company within the meaning of that Act and shall be liable to income tax and super tax accordingly on its income, profits and gains. (2) The State Government shall not be entitled to any refund of any such taxes paid by the Board. In view of the specific provisions under the Electricity Supply Act, 1948, a Board constituted under the said Act and the Board is liable to pay tax under the provisions of Income Tax Act, 1961 and therefo .....

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is also subject to the rigorous of the Income Tax Act. Therefore, we are of the view that the Rajasthan State Electricity Board was a government company and was subject to the Income Tax Act. 9.2 Since the Rajasthan State Electricity Board was a government undertaking and was an income tax entity, therefore, it was having block of assets and fixed assets. Admittedly by the gazette notification dated 18/1/2002, the Rajasthan State Electricity Board was divided into five undertakings and the tota .....

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lectricity Board, the allowable depreciation up to 19/7/2000 was mentioned as ₹ 1,04,82,30,121/-.Since block of assets were transferred to the assessee, therefore, the insistence of the ld Assessing Officer for physical verification of the assets for the purposes of depreciation, in our view, was not warranted. In our view, once the assets are forming part and parcel of the block of assets, which were transferred to the assessee from Rajasthan State Electricity Board, the physical verifica .....

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ransfer as envisaged under the Act. As per explanation-6 of Section 43(1), the actual basis of transferee company would have to be written down value of the transferor company meaning thereby the block of assets, which was transferred by the Rajasthan Electricity Board with the original cost of acquisition, shall be determined the written down value for the assessee company. The Hon ble Delhi High Court in the case of Dalmia Ceramic Industries Ltd. Vs. CIT (2005) 277 ITR 219 has held that what w .....

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the written down value of the assets acquired by the assessee from the transferor company (RACB). The relevant portion of the judgment is reproduced hereinbelow: 8. The only issue before this court is whether the written down value of the holding company is to be taken as actual cost of the assessee or the amount paid by the assessee to the holding company? Chapter IV of the Act refers to computation of business income and section 43 is required to be examined for the purpose of deciding this ma .....

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s of running it on hire for tourists, exceeds twenty-five thou sand rupees, the excess of the actual cost over such amount shall be ignored, and the actual cost thereof shall be taken to be twenty-five thousand rupees." 9. What is written down value is defined in clause (6) of section 43 which reads as under : " ' written-down value' means- (a) in the case of assets acquired in the previous year, the actual cost to the assessee ; (b) in the case of assets acquired before the pr .....

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value means the actual cost to the assessee less all depreciation actually allowed to him under the Act. In the instant case Explanation 2 to clause (6) of section 43 is relevant and is reproduced hereunder : " Explanation 2.-When any capital asset is transferred by a hold ing company to its subsidiary company or by a subsidiary company to its holding company, then, if the conditions of clause (iv), or, as the case may be, of clause (v) of section 47, are satisfied, the written down value o .....

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xplanation 6 to section 43(1) which reads as under : " Explanation 6.-When any capital asset is transferred by a hold ing company to its subsidiary company, or by a subsidiary company to its holding company, then, if the conditions of clause (iv) or, as the case may be, of clause (v) of section 47 are satisfied, the actual cost of the transferred capital asset to the transferee-company shall be taken to be the same as it would have been if the transferor-company had continued to hold the ca .....

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lso relied on Ciba of India Ltd. v. CIT [1993] 202 ITR 1 (Bom) as also on CIT v. Hides and Leather Products P. Ltd. [1975] 101 ITR 61 (Guj). It is required to be noted that the Revenue as well as the assessee placed reliance on the decision of the apex court in the case of Saharanpur Electric Supply Co. Ltd. v. CIT [1992] 194 ITR 294. The apex court considered the decisions in Maharana Mills P. Ltd. v. ITO [1959] 36 ITR 350 (SC) and CIT v. Hides and Leather Products P. Ltd. [1975] 101 ITR 61 (Gu .....

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6 the written down value of the holding company is required to be taken into consideration. 15. Learned counsel for the assessee submitted that the difference between the WDV and the price received for the property has been taxed in the hands of the holding company in the relevant assessment years and there is no dispute on this issue. In view of this, it was submitted that the Revenue cannot have tax benefit at both the places, namely, in the hands of the parent company and at the hands of the .....

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e are unable to accept the contention that the actual cost cannot be determined year after year on the factual or legal position applicable for the relevant previous year and that the actual cost once determined cannot be altered except in the three situations outlined by counsel where the original figure itself requires a modification." 9.5 In view thereof, this ground of the assessee s appeal is allowed. 9.6 However, we would like to add that the maintenance of fixed assets register is ne .....

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o maintain and keep the fixed assets register. We will appreciate if the assessee completes this exercise of maintaining the fixed assets register by actual verification of the assets within a period of one year from today. If the physical verification of the assets are not done by the assessee, then the assessee shall be living in fools paradise with lot of assets on papers but nothing on ground. We deem it appropriate that the said state of affairs of not maintaining up to date fixed assets re .....

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ent year 2003-04 is against disallowance of depreciation of ₹ 17,75,49,581/- U/s 43(1) explanation 10 of the Income Tax Act, 1961 (in short the Act). The ld Assessing Officer in his order dated 23/12/2008 has held as under:- It is worthwhile to mention here that such type of disallowances was made by the ACIT, Circle-1, Jodhpur in the case of Jodhpur Vidyut Vitran Nigam Ltd., for the A.Y. 2004-05 which is confirmed by the Ld. CIT(A), Jodhpur vide Appeal No. 546/2006-07 dated 30.03.2007. In .....

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plained by way of an example. For the sake of resuming the purchase cost of assets at ₹ 100/-, for which consumer has made contribution of ₹ 30/- and Govt. has given subsidy of ₹ 10/- and ₹ 20/- to cost variance reserves, therefore, the actual cost to the assessee company for that asset would come to ₹ 60/- however, it would not be justified to claim depreciation on the cost of ₹ 120/-. As per companies Act this thing can be shown in the Balance Sheet in two w .....

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nd excess depreciation on account of these reserves as deferred income over the useful period of life in systematic and rational basis, or of an amount equal to additional depreciation (excess) due to creation of these reserves has to be credited to P & L account from these reserves; if the appellant had chosen the second method, it was required to change depreciation on actual cost only in all three cases, the effect of depreciation on gross amount would have been only that ii will transfer .....

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he extent of excess depreciation. After considering the above facts and circumstances of the case I hereby recalculated the depreciation allowable to the assessee company according to the provision of Section 32(1)(iii) read with Section 43(1) explanation 10 as under:- (I) Chart showing total assets and depreciation claimed by assessee since beginning. A.Y. Total Assets Before depreciation %age of depreciation claimed Depreciation claimed Reserve amount which are not deducted from assets. 1 2 3 .....

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o come to a different conclusion. The disallowance of depreciation U/s 43(i) Explanation 10 of IT Act is therefore confirmed. However, the figure of disallowance shall be taken at ₹ 17,75,49,581/- instead of ₹ 31,61,86,877/- as discussed subsequently, in respect of Ground No. 3. Ground No. 2 is thus partly allowed. 12. Now the assessee is in appeal before us. The ld AR of the assessee has submitted as under:- The A.O. has alleged to disallow depreciation on fixed assets based on Anne .....

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of the asset. Thus both the fixed assets and grants are overstated by the amount of grants; this should have been taken as per the provisions of AS-12. (2) In case replacement of assets. WDV of the asset discarded should be reduced from the total fixed assets and losses arising from the retirement or gains or losses arising from disposal of the fixed assets, which is carried at cost should be recognized in the Profit & Loss Account. However this is not being done. Also scrap is accounted for .....

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sset, WDV of the asset, WDV of the asset discarded is not reduced from the Gross value of the asset, depreciation is charged on the full gross value of the asset. This is against the provisions of AS-6. Thus, depreciation is overstated and net loss, which is shown as subsidy receivable from Govt. is overstated by the amount the quantification of which is not possible in the absence of full details of discarded assets and the allocation of Contribution & towards the respective asset. Besides .....

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these assets on some fictitious cost described by assessee as standard cost without any reasonable basis and difference of standard cost and purchased cost has been credited to cost valuation reserves. These can be conveniently explained by way of an example. For the sake of resuming the purchase cost of assets at ₹ 100/-, for which consumer has made contribution of ₹ 30/- and Govt. has given subsidy of ₹ 10/- and ₹ 20/- to cost variance reserves, therefore, the actual c .....

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Accounting Standards, assessee has either to charge depreciation on 'Actual Cost' i.e. ₹ 60/- as per example in P & L account and excess depreciation on account or these reserves as deferred income over the useful period of life in systematic and rational basis, or of an amount equal to additional depreciation (excess) due to creation of these reserves has to be credited to P & L account from these reserves: if the appellant had chosen the second method, it was required to .....

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reserves to P & L account, and in this way has reduces in profit to that extent, or alternatively has actually credited the general reserves to the extent of excess depreciation. Thus based on these notes to accounts and the findings in case of Jd.VVNL, Jodhpur the A.O. has alleged to disallow the claim of depreciation on fixed assets being service connections and lines considering that the reserves created out of subsidies, grants and contribution by consumer are not refundable and thus be .....

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The Electricity (Supply) Annual Accounts Rules, 1995 and Accounting Instructions. According to Rules page no. 252 & 253 the treatment of Contribution, Grants and Subsidies towards Cost of Capital Assets shall be credited in accordance with the policies laid down in the following paragraphs. 2.34 Amount receivable as Consumer's Contribution, subsidy are Grant towards Capital Assets shall be credited to appropriate account set out in Chart of Accounts only if the following conditions are .....

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ital Asset shall be done in the normal course without considering any Contribution, Subsidy are Grants towards the Cost of the Asset, Depreciation shall be charged in the normal course on the 'full cost' of the Asset. b. That the Reserves & Surpluses in which these Grants, Subsidies, Contribution are credited are in form of deposits from customers are in actual the liabilities and could not be reduced from the cost of assets for the purpose of calculation of depreciation since they a .....

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ting as approved and the accounts has been prepared on the basis and as per the bye laws the treatment of Consumers Contribution, Subsidies and Grants has been made in the books accordingly by creating the Reserves and the A.O. has erred to reduce the same from the cost and disallow portion depreciation. The Company cannot act beyond the Accounting Norms approved for them and is also Governed by Accounting for Electricity Companies and accordingly the treatment has been made in books and the A.O .....

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hich is not in relevance with the Fixed Assets Cost and is rather related to Material Cost and thus the Block of Assets has reduced for depreciation by this amount and the eligible depreciation has also reduced. Further the addition to Fixed Assets as per books has been taken by A.O. at other arbitrary figures which have also been corrected in chart. Thus as per the chart on the theory of A.O. the depreciation disallowable come to ₹ 17,75,49,581.00 for the year against taken by A.O. at  .....

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ubvention" & nullified the loss. Thus if this Depreciation is disallowed; Subvention Charges shall also got reduced & ultimately the Income/ Loss would be Nil & thus in other terms subvention being a "Provisional Income" already takes care for such variation if any. (pg. 106 of paper book or pg. 49 of Annual Report for the F.Y. 2002-03). The Ld. CIT(A) without appreciating the facts has disallowed the deprecation but has granted part relief for the technical error. 13. .....

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Section 43 of the Act provides as under:- [Explanation 10.- Where a portion of the cost of an asset acquired by the assessee has been met directly or indirectly by the Central Government or a State Government or any authority established under any law or by any other person, in the form of a subsidy or grant or reimbursement (by whatever name called), then, so much of the cost as is relatable to such subsidy or grant or reimbursement shall not be included in the actual cost of the asset to the a .....

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43 of the Act, which clearly provides that where a portion of the cost of an asset acquired by the assessee has been met directly or indirectly by the Central Government or a State Government in the form of a subsidy or grant or reimbursement, then, so much of the subsidy or grant or reimbursement shall not be included in the actual cost of the asset to the assessee. Admittedly, the amount has been received by the assessee in the form of grant/reimbursement/subsidy from the state Government ther .....

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ging of interest U/s 234B on MAT Tax. In this regard, the ld Assessing Officer has held as under:- 12. Provision of section 115JB(2) is reproduced herewith for ready reference: (2) Every assessee, being a company, shall, for the purpose of this section, prepare its profit & loss account for the relevant previous year in accordance with the provision of Parts II and III of Schedule IV to the Companies Act, 1956: Provided that while preparing the annual accounts including profit and loss accou .....

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e company has to follow accounting policies and prepare its Profit & Loss Account for the relevant previous year in accordance with the provisions of parts II & III of Schedule-VI of the Company Act, 1956, however the assessee has not followed the accounting standard AS- 12 , AS-6, AS-2, AS-1 and various defects have been also noticed by the statutory auditor Shri S.K. Bakliwal vide his report dated 29.07.2006. In such circumstances the book profit has to be calculated in accordance with .....

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nability to submit the same in such a short period. During the A.Y. 2006- 07 the assessee has not submitted any calculation and enclosed photocopy of the calculation made by the A.O. as in the A.Y. 2005-06. 16. Being aggrieved by the order of the ld Assessing Officer, the assessee carried the matter before the ld CIT(A), who had partly allowed the appeal after discussing the provisions by observing as under:- 5.6 The appellant furnished complete chart regarding calculation of depreciation for th .....

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d No. 3 is thus partly allowed. 17. Now the assessee is in appeal before us. The ld AR of the assessee has submitted as under:- The A.O. has alleged to consider all the disallowances as made above for adjustments to book profit considering that the Annual Accounts as prepared are not proper as per the Companies Act and excessive depreciation claimed in books the Book Profit can be recomputed by A.O which have been confirmed by Ld CIT (A) considering that the books are itself considered not prope .....

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as per the Rajasthan Power State Reforms Act, 1999. Out of three distribution companies the applicant is one said to be the successor of the erstwhile Rajasthan State Electricity Board. Though the book profit is "NIL" even the A.O. has invoked section 115JB of the act on the premise that there was book profit and made assessment on notional income under that section by disallowing excess depreciation claimed and has made his own calculation on the ground that accounting standard no. 1 .....

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ee, being a company, the income-tax, payable on the total income as computed under this Act in respect of any previous year relevant to the assessment year commencing on or after the 1st day of April, [2012], is less than [eighteen and one-half per cent] of its book profit, [such book profit shall be deemed to be the total income of the assessee and the tax payable by the assessee on such total income shall be the amount of income-tax at the rate of [eighteen and one-half per cent], (2) Every as .....

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relevant previous year in accordance with the provisions of the Act governing such company:] Provided that while preparing the annual accounts including profit and loss account,- (i) the accounting policies; (ii) the accounting standards adopted for preparing such accounts including profit and loss account; (iii) the method and rates adopted for calculating the depreciation, shall be the same as have been adopted for the purpose of preparing such accounts including profit and loss account and l .....

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ating the depreciation, Shall correspond to the accounting policies, accounting standards and the method and rates for calculating the depreciation which have been adopted for preparing such accounts including profit and loss account for such financial year or part of such financial year falling within the relevant previous year. BOOK PROFIT (115JA/115JB) - Net profit as per profit and loss account (after 13 adjustments) is book profit. THIRTEEN ADJUSTMENTS TO NET PROFIT TO CONVERT IT INTO BOOK .....

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. the amount or amounts set aside to provisions made for meeting liabilities, other than ascertained liabilities; or d. the amount by way of provision for losses of subsidiary companies; or e. the amount or amounts of dividends paid or proposed; or f. the amount or amounts or expenditure relatable to any income to which section 10 [not being income under section 10(23G) for the assessment years 2005-06 and 2006-07 and not being income under section 10(38) from the assessment year 2007-08] or 10A .....

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ction 10[not being income under section 10(23G) for assessment year 2005-06 and 2006-07 and not being long term capital gain under section 10(38) (from the assessment year 2007-08 onwards], 10A or 10B or 11 or 12 apply, if any such amount is credited to the profit and loss account; or c. depreciation debited to P & L A/c (except depreciation on revaluation of asset) [applicable from the assessment year 2007-081: or d. the amount withdrawn from revaluation reserve credited to P & L A/c to .....

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nt or profit eligible for deduction under section 80HHC; or g. the amount or profit eligible for deduction under section 80HHE; or h. the amount or profit eligible for deduction under section 80HHf; or i. the amount or profits of sick industrial company for the assessment year commencing from the assessment year relevant to the previous year in which the said company has become a sick industrial company under section 17(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 and endin .....

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s that - Inserted by the Finance Act, 2012, w.e.f. 1-4-2013 [For the removal of doubts, it is hereby clarified that for the purposes of this section, the assessee, being a company to which the proviso to sub-section (2) of section 211 of the Companies Act, 1956 (1 of 1956) is applicable, has, for an assessment year commencing on or before the 1st day of April, 2012, an option to prepare its profit and loss account for the relevant previous year either in accordance with the provisions of Part II .....

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t as having being properly maintain in accordance with the Companies Act and that he does not have the jurisdiction to go behind the Net Profit shown in Profit & Loss A/c except to the extent provided in adjustments above. Refer case of INDIAN OILTANKING LTD. V/S ITO (2009) as reported in 308 ITR 217 (MUMBAI) held that if the assessee follows mandate regarding Accounting Policies and Standards of ICAI and Companies Act the claimed expenses are not disallowable and addable to Book Profit. (2) .....

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the provisions of Companies Act. 1956 are in consistent with the said Electricity Supply Act. (Pg. 77 of Paper Book or Pg 20 of Annual Accounts for the F.Y. 2002-03). Thus when the applicant has been maintaining its accounts as per the provisions of Electricity Supply Act read with Electricity (Supply) Annual Accounts Rules 1985 and the provisions of the Companies Act to the extent not inconsistent with the Rules under Electricity Act. [Electricity Supply Act since has been repealed by the Elec .....

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Accounting Standards and physical verification of fixed assets by him for changing the Book Profit for calculation of MAT whereas the Auditor has no commented or disallowed any of these assets he has just given his opinion. (4) Further the Assessee is a State Government owned Company and as per the Government commitment the loss of the company at the year end is to be borne by the State Government only and as per the approved Accounting Norms the share of loss is treated as income from Governmen .....

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the net result as per Annual Accounts revised would be again nil Book Profit. Thus it is requested that the provisions of section 115JB in view of aforesaid legal aspects cannot be applied. 18. The ld DR has vehemently relied on the orders passed by the lower authorities. 19. We have heard the rival contentions of both the parties and perused the material available on the record. We have also gone through the contention raised by the assessee as well as the order passed by the Advance Rulings (I .....

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es in favour of the assessee. We also held that the benefit as has been given to Jodhpur Vidyut Vitran Nigam Limited under the provisions of the Electricity Act and the Companies Act be also extend it to the assessee without insisting for the application of Section 115JB of the Act In the light of the above, the issue is decided in favour of the assessee and against the revenue. Accordingly, this ground of appeal of the assessee is allowed. ITA No. 549/JP/2009 20. Ground No. 1 of the revenue s a .....

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No. 1019/JP/2007 Hon ble ITAT made the following observation:- The Id CIT(A) while deciding the issue has followed the decision of Jaipur Bench of the Tribunal on the issue in the case of DCIT v/s Chambal Fertilizers and Chemicals Ltd., 34 TW 59 (Jpr.) holding that the deduction of an expenditure will be admissible only in the year in which it crystallized and accounted for on the basis of system of accounting regularly followed by the assessee. An identical issue in the case of assessee for th .....

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the system under the peculiar circumstances of the case when the company came into existence after restructuring of the parent company i.e. RSEB. The first appellate order being reasoned one is thus upheld. So far as addition of ₹ 66,87,891/- on account of adjustment of allocation errors is concerned, it was explained by the assessee that the same is on account of an adjustment entry which arose on account of change in composition of SLR Bonds (Short Lending Rate Bonds) through which the .....

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ion. Afler verification of records, the Id CTT(A) observed that the sum of ₹ 66,87,891/- under the head Adjustment of Allocation Error" was in the nature of income and the same was offered as such by the assessee in the return. However, the AO has mistakenly treated the same as expenditure and disallowed the same, which resulted in double addition of the same amount. The Id CIT(A) observed further that probably this mistake has occurred because in the immediately preceding year, item .....

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the assessment order it is found that the AO asked the appellant to produce vouchers for prior period expenses of ₹ 1,08,84,667/-. The appellant produced vouchers for total amount of ₹ 3,76,18,547/-. The AO therefore, concluded that the remaining sum of ₹ 9,32,66,120/- is not allowable within the meaning of section 37(1) of the IT Act. This action of the AO is not justified. The accounts of the appellant are audited and there are no adverse comments of auditors in this regard. .....

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