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M/s. Siddharth Corporation and M/s. Gautam Enterprises Versus Asst. Commissioner of Income Tax Circle, Vapi

ITA No.866/Ahd/2007 and ITA No.867/Ahd/2007 - Dated:- 26-3-2010 - Shri G.D. Agarwal, Vice-President (AZ) And Shri Mahavir Singh, Judicial Member. Assessee by: Shri Bandish Soparkar, AR Revenue by: Smt. Neeta Shah, SR-DR ORDER PER Mahavir Singh, Judicial Member:- These two appeals by different assessee are arising out of different orders of Commissioner of Income-tax (Appeals)-Valsad in appeal No. CIT(A)/ VLS/258-259/05-06 of even date 31-10-2006. The assessments were framed by the ACIT, Vapi Cir .....

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the case of M/s. Siddharth Corporation. The ground regarding this issue reads as under:- (1) The AO has erred in making disallowance of ₹ 10,59,964 out of depreciation claim of ₹ 16,42,863 in the return of income and while making the disallowance the Assessing Officer has erred in working out WDV of depreciable assets at the beginning of the year on the basis as if depreciation was actually allowed during the assessment year 1999-00 to 2001-02, even though the applicantfirm opted not .....

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preciation for the year under consideration at ₹ 16,42,863/- as calculated by the AO at ₹ 5,82,899/- . The AO gave reasons that the assessee has not claimed depreciation on the fixed assets from assessment years 1999-00 to 2001-02 on the manufacturing unit and carried forward the same WDV as on 31-03-2002 and on the same WDV as on 31-03-2003, the assessee claimed depreciation. The AO computed the revised WDV, by treating the depreciation as have been allowed up to assessment year 200 .....

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second appeal before us. 4. Before us, Ld. Counsel for the assessee Shri, B. Soparkar filed copy of Tribunal s order for the assessment year 1999-00 to 2001-02 in ITA No.959-961/Ahd/2005 dated 01-03-2005, whereby the Tribunal has quashed the rectification order passed u/s.154 by the Assessing Officer thrusting upon the depreciation on the assessee. Ld. counsel for the assessee further stated that once the depreciation is not allowed in these years, the assessee was to carry forward the WDV, by .....

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hows that the WDV in respect of which depreciation is to be calculated is the actual cost of the asset to the assessee as reduced by the amount of the depreciation actually allowed to the assessee. Now in the instant case, it is not in dispute that in the earlier years no depreciation was allowed to the assessee in respect of the fixed assets in question. The Revenue could not bring on record any material before us to show that though the depreciation was not claimed by the assessee but in fact .....

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nd not the amount which ought to have been allowed to the assessee. It is the actual depreciation allowed to the assessee which only can be reduced for ascertaining the WDV and not the amount which is notionally allowed to the assessee. Thus, in the absence of any material brought before us to show that any remedial measure was taken by the Revenue in the earlier assessment years to actually allow the depreciation to the assessee in the year in which the assessee has himself not claimed such dep .....

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00 to 2001-02 no depreciation claim has been made by the assessee and no depreciation has been allowed by the AO and once this is a case, the depreciation has to be computed on the WDV taken at the end of the year. The AO in this year re-computed the WDV by thrusting upon the depreciation of earlier years. Accordingly, we find force in the arguments of Ld. Counsel for the assessee that the depreciation is to be allowed without considering the depreciation of earlier years and also on WDV compute .....

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e. The assessee contended that the writing off is on account of discount and commission deducted by six customers from their payments over a period of years. The Assessing Officer disallowed the claim of bad debt by observing that the assessee has continuing business relationship with these customers in whose account written off has been made and claimed as bad debt. The AO also observed that the assessee has business transaction with these parties since long and the discount, kasar or commissio .....

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he AO that it is not a case in which the appellant has suddenly come to know of any debt becoming bad. It is a case in which the customers of the appellant gave short-payments and availed discounts on transactions with appellant year after year. Thus, the claim of the appellant in the year under reference is out of place, misconceived and with a mala fide intention to reduce the tax burden in the year in which the tax-holiday is over. The appellant is not justified in making the claim of ₹ .....

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he assessee Shri Soparkar relied on the case law of Hon ble apex court in the case of T.R.F. Limited v. CIT in Civil Appeal No.5293 of 2003 dated 9th February, 2010. The Ld. counsel for the assessee stated that this common issue in the appeals of the assessee is in favour of assessee and against the Revenue as the assessee has written off these bad debts in its books of account. 9. After hearing the rival contentions and we find that these expenses written off by the assessee is as on account of .....

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