TMI Blog2016 (12) TMI 1075X X X X Extracts X X X X X X X X Extracts X X X X ..... e income/loss so determined is reduced in appeal the claim of set off shall be subject to change accordingly. Therefore, this issue needs verification by the A.O. while giving effect to the orders of the appellate authorities. We, therefore, do not find any error or infirmity in the direction of the ld. Principal CIT. The order to the same effect is upheld to this extent. Treatment of Government Grant u/s. 115JB - Held that:- We find that the ld. Principal CIT has ignored the fact that the grant in question was received in terms of the Financial Restructuring Plan from the Government and the company has accounted Government Grants in terms of the mandatory Accounting Standard (AS)-12 on “Accounting for Government Grants” prescribed by the ICAI. Considering the accounting treatment in the light of the Accounting Standard-12, we do not find any error on facts or in law. Therefore, to this extent the findings of the ld. Principal CIT are reversed. Provision for Collapsed Cooling Tower u/s. 115JB - Held that:- The lower of Net Booked Value and Net Realizable Value have to be considered and expected loss is to be recognized in the Profit and Loss account. The assessee has worth 50 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reduced from the cost of capital assets instead of it being taken to the Reserves Surplus for the year under consideration, the assessment of which has already been finalized under section 143(3) of the I T Act. 4.1 learned Commissioner of Income Tax-1, Baroda erred in law and on facts has held that the appellant has claimed excess depreciation and that has thereby understated the book profits under section 115JB of the I T Act. The learned Commissioner of Income Tax, therefore, has directed the Assessing Officer to make addition to the extent of 15% of the year end balance of Grants. 5.0 The learned Commissioner of Income Tax-1, Baroda erred in law and on has held that the loss written off amounting to 5,25,87,0007- on collapse of a Cooling Tower at Kutch Lignite Power Station is not allowable on the ground that the same is merely an adhoc provision made on estimated basis. The learned Commissioner of Income Tax, therefore, has directed the Assessing Officer to make addition to the extent of loss claimed by the appellant both under normal provisions as well section 115JB of the IT Act, 1961. 3. Briefly stated the facts of the case are that an assessment was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 2 [(29BA) manufacture , with its grammatical variations, means a change in a non-living physical object or article or thing,- (a) resulting in transformation of the object or article or thing into a new and distinct object or article or thing having a different name, character and use; or (b) bringing into existence of a new and distinct object or article or thing with a different chemical composition or integral structure;] 8. This amendment has been inserted by the Finance (No. 2) Act, 2009 with retrospective effect from 01.04.2009. We are in assessment year 2010-11. 9. Since the Assessing Officer has not considered the amendment brought to the definition of manufacture and have allowed the claim of additional depreciation on the basis of earlier decisions mentioned hereinabove, in our considered opinion, there is an error in law in the assessment order and, therefore, we do not find any reason to interfere with the findings of the ld. Principal CIT to this extent. 10. The next issue relates to the set off of brought forward losses. The relevant observations of the ld. Principal CIT reads as under:- 5. It was noticed that assessee gave set off of bus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... preciation amounting to ₹ 1,16,28,29,634/-,there remained a profit of ₹ 80,76,29,404/- as shown in the below table: Assessed income before allowing set off of earlier years losses Rs.1,97,04,59,038/- Set off of earlier years' business loss Nil No loss was available for set off Set off of brought forward unabsorbed depreciation (Rs.1,16,28,29,634/-) Rs.1,16,28,29,634/- No amount remains to be carried forward to A.Y. 2011-12. The amount carried forward is required to be withdrawn Rs.80, 76, 29,404/- There remained no business loss or unabsorbed depreciation for carry forward and set, off 11. A perusal of the order of the authorities below shows that the assessee company has claimed set off of unabsorbed business loss/unabsorbed depreciation as per the return of income field by the assessee company. The set off of loss and depreciation are to be allowed on the basis of income/loss determined in the assessment of a par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ardly any equity requirement which is required to be contributed by GUVNL. Moreover, the capita! grant being released by GoG to GUVNL for various DISCOM related projects, the Board at the meeting held on 04.01.2010 has approved to allocate the same to DISCOMs in the form of Share Capital from GUVNL. Since the DISCOM related grants alongwith consumers' contribution meet with the equity requirement of DISCOMs it is proposed not to allocate the FRP grant to DISCOMs for the FY 2009-10. As regards to GETCO, they have incurred capital expenditure of ₹ 650 crores upto January'10. Against the said capital expenditure, they have received consumers' contribution to the tune of ₹ 87 crores. Further, the Govt. grant towards creation of transmission lines and sub-stations of ₹ 151 crore (RE) is specifically meant for GETCO. In addition for creation of new Sub-Stations in coastal areas under Sagarkhedu Yojana, Govt. of Gujarat has given Share Capital Contribution of ₹ 37.20 crores to GUVNL. The said grant and share capital contribution will be given to GETCO as share capital contribution from GUVNL. In addition, in the revised estimate, Govt. has made a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... % of the written down value of the Cooling Tower. The facts are that a Natural Draft Cooling Tower No.3 at KLTPS was collapsed during the year the cost of which alongwith the date of put to use is under: Sr. No. ' Date of put to Use Cost (Rs.) 1 01.04.1993 850,81,208.89 2 01.04.1994 108,71,653.08 3 01.04.2004 499,63,720.59 Total 1459,15,582.56 For the purpose of finalizing the accounts of the company, the usefulness of the remaining structures were determined and after detailed verifications, it was decided that 50% of the cost of the Cooling Tower can be utilized in the construction of new Cooling Tower. Accordingly only 50% of the Written Down Value of ₹ 525.87 lacs (Cost ₹ 1459.17 Lacs Less Total Depreciation till date ₹ 407.45 lacs) was written off as loss and booked under the head Miscellaneous losses written off. Thus, the said los ..... X X X X Extracts X X X X X X X X Extracts X X X X
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