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2017 (2) TMI 631 - ITAT JAIPUR

2017 (2) TMI 631 - ITAT JAIPUR - [2017] 55 ITR (Trib) 651 - Reopening of assessment - disallowance of claim of additional depreciation and claim of deduction u/s 43B - Held that:- In the instant case, the assessee has claimed depreciation on power plant and windmill @ 80% on written down value basis under section 32(1)(ii) of the Act. The Assessing officer has not challenged such claim of depreciation under section 32(1)(ii), however, on the same assets, the claim of additional depreciation unde .....

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under challenge before us. There cannot be a situation where the additional claim of depreciation is disputed stating that the original claim of depreciation has been wrongly claimed but without disturbing (rather accepting) such original claim of depreciation. We are therefore of the considered view that the reasons recorded are self-contradictory and cannot form the basis to initiate reassessment proceedings. On this ground alone, the reopening of assessment u/s 147 cannot be held valid in la .....

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Held that:- It is now a settled position that the process of generation of electricity is akin to manufacture of an article or thing, the assessee in the instant case satisfy the requirement that it is engaged in the business of manufacture or production of an article or thing. Now coming to the amendment which has been brought-in by the Finance Act 2012 w.e.f. A.Y. 2013-14 whereby the assessee engaged in the business of generation or generation & distribution of power have specifically been in .....

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on on the power plant and the windmill installed during the year. Hence the ground of the department is dismissed. - Disallowance u/s 43B - CIT(A) allowed the claim - Held that:- The service tax and land tax are statutory liabilities which are paid during the year as per the orders of the CESTAT and Hon’ble Rajasthan High Court. These are statutory liabilities which pertain to the business carried on by the assessee. The assessee cannot be denied a deduction in respect of these payments mere .....

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1-2017 - Shri Kul Bharat, JM And Shri Vikram Singh Yadav, AM Assessee by : Shri P. C. Parwal (CA) Revenue by : Shri H. V. Gurjar (CIT) ORDER Per Shri Vikram Singh Yadav, A. M. These are two appeals filed by the Revenue against the order of ld CIT(A), Kota dated 29.11.2013 and 22.07.2014 relevant for assessment years 2008-09 & 2009-10 respectively. Both the appeals having identical facts, the same were heard together and are being disposed off by this consolidated order. The grounds of appeal .....

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of power generating units. (ii) On the facts and in the circumstances of the case, the ld. CIT(A) has erred in deleting the disallowance of ₹ 1,41,57,121/- made by the AO u/s 43B. ITA No. 681/JP/14 - AY 2009-10 (i) On the facts and in the circumstances of the case, the ld. CIT(A) has erred in annulling the assessment order by holding that reopening of the assessment u/s 147 of the Act in this case was merely change of opinion, and therefore, bad in law. (ii) On the facts and in the circum .....

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of Rule 46A. 2. Firstly, we will take up appeal for AY 2008-09. In respect of ground no. 1, briefly the facts of the case are that the assessment u/s 143(3) of the Act was completed on 31.12.2010 by making certain additions/disallowances to the returned income filed by the assessee company. Thereafter, a notice u/s 148 dt. 17.08.2012 was issued to the assessee for the following two reasons: (a) Assessee has claimed and was allowed additional depreciation of ₹ 18,16,98,068/- u/s 32(1)(iia) .....

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section amount of expenditure is first booked in expenditure and if not paid, be added back to income and thereafter deduction is given on payment basis. 3. In response to the said notice, the assessee vide letter dt. 21.09.2012 objected to the issuance of notice u/s 148 by interalia submitting as under:- (a) As per 2nd proviso to Rule 5(1A), an undertaking engaged in generation or generation and distribution of power, may instead of claiming depreciation on its assets under clause (i) of sec. 3 .....

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/s 147 disallowed the claim of additional depreciation by holding that in view of amended provision of sec. 32(1)(iia), assessee s engaged in the business of generation or generation and distribution of power is allowed additional depreciation w.e.f. A.Y. 13-14, meaning thereby, that they were not allowed additional depreciation during the year under consideration i.e. A.Y. 08-09. In respect of claim of assessee u/s 43B, he held that explanation of the assessee is not acceptable and therefore di .....

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im of additional depreciation on power plant and windmill, and the claim of deduction u/s 43B was examined in the course of assessment proceedings u/s 143(3) as under:- (a) AO vide query letter dt. 25.10.2010 in Point No. 3 and 9 required assessee to furnish assets register and file copy of accounts of all assets added or sold during the year so as to consider the assessee s claim of depreciation on these assets. In response to same, assessee vide reply dt. 09.11.2010 in Point No. 3 and 9 submit .....

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In response to same, assessee vide Point No. 9 of Annexure 26 furnished documents/supportings/information of transaction of assets having value of more than ₹ 1 lacs. It further vide reply dt. 14.12.2010 in Point No. 10, 11 and 12 explained about the power plant and the windmill. It further explained that depreciation claimed is allowable u/s 32. After examining the same, along with the depreciation chart, additional depreciation was allowed by the AO. (b) AO vide query letter dt. 25.10.2 .....

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Point No. 8 of the said letter by referring to the fact that as per computation, assessee has claimed deduction of ₹ 54,30,165/- for land tax of F.Y. 07-08 deposited on 07.02.2008, required assessee to explain that why an amount of ₹ 54,30,165/- of land tax deposited on 01.11.2008 as per details filed be not disallowed u/s 43B. In response to the said letter, assessee vide Point No. 7 of Annexure 26 submitted that it has already submitted detailed enclosures of payment allowable u/s .....

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vidence, AO while framing assessment u/s 143(3) allowed the claim of deduction u/s 43B. 7. The ld AR submitted that from the above, it can be noted that when the AO in the original assessment proceedings has examined the issues of additional depreciation and deduction u/s 43B, on those very issues notice u/s 148 taken by him is only on account of change of opinion. On such change of opinion, re-assessment proceedings initiated by him, even within a period of 4 years, is illegal and bad in law. F .....

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audit report in the prescribed form 10CCB in support of claim for deduction u/s 80- IA/80-IB was also duly submitted. The assessee had also submitted reply pursuant to all the queries made by the AO during assessment proceedings u/s 143(3) of the Act. Thus, the contention sought to be raised by the Revenue about non-disclosure on the basis of failure on the part of the assessee in mentioning bifurcated amount of additional depreciation allowable in the depreciation chart is absolutely baseless. .....

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at the time of scrutiny assessment which amounts to mere change of opinion. In the garb of purported exercise of the power to reassess, the AO cannot be permitted to review his own order or the order passed by his predecessor. Thus, the finding arrived at by the ITAT that the reassessment proceedings initiated by the AO by mere change of opinion is patently illegal, cannot be faulted with. Therefore, the ITAT having arrived at the categorical finding that reopening of the completed assessment wi .....

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u/s 148 seeking to reopen the assessment on the ground that business of assessee was land development and sale and purchase of plots and, hence, the land/plots were nothing but stock-in-trade and the profit/income arrived by the assessee should be treated as business income. It was held that since AO had passed the assessment order after taking into consideration all the relevant facts, reassessment proceedings could not be initiated merely on the basis of change of opinion even within a period .....

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and decides not to make an addition accepting the assessee s position or stand. Reassessment proceedings in the said cases would be hit by the principle of change of opinion . In case an issue or query is raised by the AO and answered by the assessee in the original assessment proceedings, and the AO does not make any addition, it has to be accepted that the issue has been examined but the AO did not find any ground or reason to make any addition, and thus, the reassessment would be invalid. Onc .....

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e computation of income furnished with the return. AO raised a specific query regarding allowability of the said software expenses as revenue expenditure and specifically asked the assessee to justify the claim for deduction thereof. Assessee wrote a letter to the AO giving the justification and stating the relevant facts. AO was satisfied with the assessee s reply that the expenses were allowable as revenue expenditure though he did not made any specific reference on this issue in the assessmen .....

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he assessment order did not ipso facto give jurisdiction to the AO to reopen the assessment. Therefore, the initiation of reassessment proceedings was void ab initio. 8. The ld AR further submitted that the AO while framing assessment u/s 143(3)/147, disallowed the assessee s claim of additional depreciation u/s 32(1)(iia) not for the reason for which notice u/s 148 was issued but for an entirely different reason as stated in the facts above. Thus, order u/s 143(3)/147 to this extent is illegal .....

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ded to the cost of the property from year to year so as to depict true and correct picture of the company. In the process of widening of the road, the Bombay Municipal Corporation took over the front side of the property and thus assessee was left with the balance plot. Assessee sold the development rights of the said property in 1999 but retained the right of balance FSI with it. The right on FSI, which was retained, was valued and was reflected in the balance sheet. On sale of development righ .....

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of 110 units and sold the same during the period. In response to the show-cause notice, assessee furnished a detailed reply and upon going through the reply, AO noticed that the initial assumptions which were the basis for reopening of the assessment were wrong but, he proceeded to recompute the total income on the ground that the assessee is not entitled to the benefit of indexed cost of acquisition of the property, by treating the sale proceeds as capital gains. In the opinion of the AO, incom .....

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e assessment on the strength of the reasons recorded for reopening the assessment but on altogether different grounds. Hon ble Supreme Court in 130 ITR 1 held that though Court cannot investigate into the adequacy or sufficiency of the reasons, the Court can certainly examine whether the reasons are relevant and have a bearing on the matters in regard to which he is required to entertain such a belief, before a notice is sought to be issued u/s 148 of the Act. In other words, if there is no rati .....

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o harass the assessee. AO had reopened the assessment on arbitrary and flimsy grounds and since no addition was made on the strength of such reasons, Ld. CIT(A) was justified in quashing the reassessment proceedings. 9. The ld AR further submitted that in respect of disallowance u/s 43B, the AO has not stated anything as to why the explanation of assessee is not acceptable. The assessee has given various case laws vide letter dt. 21.09.2012 where it was held that statutory liability is allowable .....

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and the order is held to be ab-initio void. 10. The ld DR is heard who has vehemently argued the matter and supported the reopening of assessment proceedings. He submitted that the both the issue of claim of additional depreciation as well as claim under section 43B was not examined by the AO in the original assessment proceedings and hence, there is no question of change of opinion. 11. We have heard the rival contentions and pursued the material available on record. The Revenue has challenged .....

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garding the claim of additional depreciation on power plant and windmill, and the claim of deduction u/s 43B were examined in the course of original assessment proceedings u/s 143(3) of the Act. It was further submitted that when the AO in the original assessment proceeding has examined both the issues, the issuance of notice u/s 148 on those very issues is only on account of change of opinion and on such change of opinion, reassessment proceedings initiated by him even within a period of four y .....

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edings or not. The expression change of opinion postulates formation of an opinion and then a change thereof. In the context of section 147, it implies that the AO has formed an opinion at the first instance in the original assessment proceedings and later proposes or wishes to take a different view on a particular matter. It would therefore be relevant to examine whether the issue of claim of additional depreciation as well as claim of deduction u/s 43B was examined in the course of original as .....

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with copies of purchase bills and the details of payments made. The cost of transportation of the capital assets, the erection & installation expenses and other incidental expenses for putting these assets in use may be separately worked out. If the same are charged to revenue expenditure, identify the amounts and head of accounts under which they are debited. (9) Produce the assets registers required to be maintained as per the Company Laws and file the copies of accounts of all the assets .....

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production and sales details have been shown in the books of accounts. Please furnish month wise details of production and sales alongwith documentary evidence of production commenced. Please also file complete details of income and expenditure details of above plants separately. (11) As per depreciation chart filed, investment of ₹ 79.44 crores and Rs. 33.62 crores has been shown in the case of Mangalam Power Plant, Morak but no WDV as on 01.04.2007 and addition made during the year has b .....

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details of production and consumption thereof and file copy of agreement if any with RSEB for power supply. 12.3 The assessee vide its letter dated 14.12.2010 has submitted as under: (10) We are enclosing herewith following documents of the Mangalam Power plant, SITUATED AT Morak and Mangalam Wind Mills situated at Jaisalmer: (i) Balance sheet and Profit and Loss account of above units (Ref.Ann 34(a) (ii) Computation of income of above units (Ref.Ann 34(b) (iii) Details of monthwise production .....

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during the year therefore, opening balance of block accounts is NIL. The amount incurred till 31.03.2007 was shown as capital work in progress amounting to ₹ 6460.27 lacs of Mangalam Power Plant. Refer Balance sheet of Mangalam Power Plant. This amount can be verified from the last year figure in the Balance sheet. We submit hereunder: (i) Details of block wise assets of the Mangalam Power Plant and Mangalam Wind mills already submitted o 19.11.2010 in detail. (ii) We are enclosing herewi .....

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: (i) Copies of agreements with JVVNL and Suzlon Energy Ltd. relating to Banking and wheeling agreements for Mangalam Wing Mills (ii) Details of production and consumption have already been mentioned in point No.10 above. As per the details mentioned above, your goodself will find that a receipt of ₹ 2345.85 lacs from Power Plant and ₹ 47.69 lacs from wind mills is disclosed as per P&L account of the respective units. Since units generated were consumed by the cement plants for c .....

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er depending on the nature of the assets - tangible/intangible assets and the period of usage, the rate of depreciation has been prescribed which can be claimed by the assessee. In the context of additional depreciation, the provisions are contained in section 32(1)(ii)(a) which provides that where a new machinery or plant (other than ships and aircraft) which has been acquired and installed after the 31st day of March, 2005 by the assessee who is engaged in the business of manufacture or produc .....

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a) of the Act provides that a further sum equal to 20% of actual cost of such machinery or plant shall be allowed as deduction under clause (ii). In other words, the machinery or plant which are otherwise eligible to depreciation under section 32(1)(ii) of the Act shall be allowed additional depreciation at the rate of 20% of actual cost. The claim of additional depreciation at actual cost is therefore closely linked and connected to machinery or plant which are otherwise eligible for depreciati .....

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nstant case, the assessee has claimed depreciation on power plant and windmill @ 80% on written down value basis under section 32(1)(ii) of the Act. The Assessing officer has not challenged such claim of depreciation under section 32(1)(ii) of the Act, however, on the same assets, the claim of additional depreciation under section 32(1)(iia) has now been challenged by issuance of notice u/s 148 of the Act. The basis of formation of belief by the AO that the assets falls under clause (i) and not .....

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laimed but without disturbing (rather accepting) such original claim of depreciation. We are therefore of the considered view that the reasons recorded are self-contradictory and cannot form the basis to initiate reassessment proceedings. On this ground alone, the reopening of assessment u/s 147 cannot be held valid in law and is liable to be quashed. 12.6 Further, on review of the queries raised by the AO, it transpires that the same were related to examination of purchase of the assets during .....

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tual costs available at APB 30-31. In our view, even though the query letter from AO didn t specifically mention about claim of additional depreciation and talks about depreciation claim, the queries raised by the AO were equally relevant for examining the claim of depreciation as well as additional depreciation and more so, when the same were originating from the same set of depreciation chart furnished by the assessee company. Thereafter, on review of submissions and related documentation file .....

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sue of claim of deduction u/s 43B of the Act we agree with the contentions of the ld. AR that the issue has been duly examined by the AO during the course of original assessment proceedings and to this extent there is clearly a change of opinion which has been rightly upheld by the ld. CIT(A). 12.8 In the result, the ground no. 1 of the Revenue is dismissed. 13. Now coming to ground no 2 where, on merits, the Revenue has challenged the action of the ld CIT(A) in deleting the disallowance of S .....

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ectly utilized in manufacturing of cement whereas the electricity produced from windmill at Jaisalmer was supplied to Jaipur Vidhyut Vitran Nigam Ltd. who in turn reduce that quantity of electricity from the power bill raised on the assessee. On these P&M, assessee claimed additional depreciation of ₹ 18,16,98,068/- (Rs.14,44,58,058 + ₹ 3,72,40,000) u/s 32(1)(iia) of the Act. 13.2 The AO while framing assessment u/s 143(3)/147 held that in view of amended provision of sec. 32(1)( .....

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nerating power and therefore the assessee clearly falls in the first category and was eligible for depreciation. Secondly, the assessee s case is also covered by section 32(1)(iia) wherein additional depreciation is allowable if the assessee is engaged in the business of manufacture or production of any article or thing. The assessee was manufacturing cement (which has to be treated as an article or thing) and therefore was eligible for additional depreciation. 14. The ld AR submitted that for c .....

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d by the assessee are basically for manufacturing of cement i.e. article or thing. Hence, the subsequent amendment made in A.Y. 2013-14 do not effect the claim of additional depreciation on the power plant/windmill installed by the assessee. 14.1 In support, the ld AR places reliance on the following cases:- Principal CIT Vs. Kanishk Steel Industries (2016) 96 CCH 0292 (Mad.) (HC): In this case, the assessee was stated to have set up two wind mills in addition to the already existing four wind m .....

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ng the surplus power generated to the Tamil Nadu Electricity Board. As far as application of Section 32(1)(iia) of the Act, is concerned, what is required to be satisfied in order to claim the additional depreciation is that the setting up of a new machinery or plant should have been acquired and installed after 31st March 2002 by an assessee, who was already engaged in the business of manufacture or production of any article or thing. The said provision does not state that the setting up of a n .....

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essee already in the business of manufacture of chemicals, is eligible for additional depreciation u/s 32(1)(iia) in respect of windmill electricity generating machinery acquired by it. JCIT vs. Mineral Enterprises Ltd. (2013) 144 ITD 680 (Bang.)(Trib.): The assessee was engaged in manufacture of article or thing. By exercising the option provided under second proviso to rule 5(1A), it claimed additional depreciation on wind mill. The AO disallowed the claim of additional depreciation on wind mi .....

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anufacture of textile goods. It set up a windmill for generation of power and claimed additional depreciation u/s 32(1)(iia). AO held that setting up of a windmill has absolutely no connection with the manufacturing of textile goods and thus assessee is not entitled to claim additional depreciation u/s 32(1)(iia). It was held that to claim additional depreciation u/s 32(1)(iia), what is required to be satisfied is that setting up of a new machinery or plant should have been acquired and installe .....

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nufacture of textile goods is totally not germane to the specific provision contained in s. 32(1)(iia) of the Act. Accordingly, additional depreciation on windmill as allowed by CIT(A)/ITAT was upheld. This view was also followed in case of CIT Vs. Hi Tech Arai Ltd. 321 ITR 477 (Mad.)(HC) and CIT Vs. Texmo Precision Castings 321 ITR 481 (Mad.)(HC) 14.2 It was further submitted that the expression article or thing used in section 32(1)(iia) is not defined in the IT Act, 1961. The Supreme Court in .....

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be sale and purchase of electric energy like any moveable object, then electric energy is covered by the definition of goods and thus admissibility of additional depreciation could not be denied to assessee merely on the ground that electricity is not an article or thing. In view of the said decisions, P&M acquired and installed by assessee for generation of electricity is akin to manufacture or production of an article or thing and consequently assessee is entitled for additional depreciati .....

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s been incorrectly interpreted by AO. The Hon ble Chennai Tribunal in case of ACIT Vs. M. Satish Kumar (2012) 19 ITR (Trib.) 646, case pertaining to A.Y. 08-09, has given a finding on such amendment and has held that generation of electricity is a manufacturing activity entitling assessee to claim additional depreciation u/s 32(1)(iia). In this case, assessee was engaged in the business of sale of imported second hand machinery and generation of electricity through windmills. He installed two wi .....

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not a manufacturer. For availing benefit of additional depreciation, it is essential that assessee should be engaged in manufacturing activity. Therefore, assessee is not entitled to additional depreciation u/s 32(1)(iia). Assessee submitted that it had no claimed additional depreciation on 1st windmill since he was not involved in any manufacturing or production activity at that time. Now, he is claiming additional depreciation on 2nd windmill as he is already engaged in the business of produc .....

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tricity falls within the definition of goods under the provisions of Sale of Goods Act, 1930. The Delhi Bench of the Tribunal in the case of NTPC Ltd. (supra) after a detailed examination of several judgments, Acts, Constitution of India, has concluded that the process of generation of electricity is akin to manufacture of an article or thing. In view of the above, we are of the considered opinion that generation of electricity is a manufacturing activity. The assessee is involved in the manufac .....

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Further, the Hon ble Kolkata Tribunal in case of Damodar Valley Corporation (2016) 160 ITD 78, case pertaining to A.Y. 11-12 held that on perusal of section 32(1)(iia) of the Act as it stood upto A.Y. 2012-13, it is evident that the additional depreciation is permissible to all assessees who are engaged in the business of manufacture or production of any article or thing. In the circumstances, the assessee who is desirous of claiming the additional depreciation need only to prove that during th .....

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te. A particular item should undergo changes in its colour and character and become a separate and new marketable commodity after the manufacturing process. In the instant case, the assessee had set up hydel power and thermal power plant, wherein the water and coal gets converted into electricity through the manufacturing process. Hence it is undisputed that transformation from mere coal to electricity and from mere water to electricity happens pursuant to the manufacturing process and the elect .....

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he ld DR is heard who has relied on the order of the AO. 16. We have heard the rival contentions and pursued the material available on record. In this regard, it would be relevant to go through the reasons recorded by the AO before issuance of notice u/s 148, the assessee s response thereto and the final findings of the AO. 16.1 Firstly, in the reason recorded before issue of notice u/s 148, the AO has stated as under: In this case, assessment u/s 43(3) of the IT Act was passed on 31.12.2010 at .....

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ave been covered under the clause (i) of the ibid section, therefore no amount of additional depreciation was allowance on the assets of Mangalam Power Plant, Morak unit and Mangalam Wind Power plant in Jaisalmer. 16.2 The assessee however objected to the issuance of the notice and vide its submission dated 21.09.2012 has submitted as under:- (1.1) It may be noted that section 32(1) was amended w.e.f. 01.04.98 whereby under clause (i) of this section an undertaking engaged in generation or gener .....

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eprecation specified in appendix 1A at its option be allowed depreciation as per Appendix-1, if such option is exercised before the due date for furnishing the return of income u/s 139(10 & the option once exercised shall be final & shall apply to all the subsequent A.Ys. (1.3) From the above provisions, I is clear that the undertaking engaged in generation of generation & distribution of Power has an option to claim the depreciation either u/s 32(1)(i) or 32(1)(ii). We have installe .....

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option required under second proviso to rule 5(1A) as held by the ITAT Chennai Bench in the case of K.K.S.K.Leather Processors Pvt. Ltd. vs. ITO 126 ITD 215. (1.4) Without prejudice to above, the depreciation u/s 32(1)(i) is allowable to an undertaking engaged in generation or generation & distribution of powers at its option. This alternative basis is available only for those who are covered by the Electricity Act & the Indian Electricity rules 1956. Any other industrial undertaking wh .....

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e u/s 148 is bad in law. 16.3 Thereafter, the AO completed the reassessment proceedings whereby the assessee s claim for additional depreciation was disallowed by holding that in view of the amended proviso to section 32(1)(iia),the assessee is allowed additional depreciation w.e.f. A.Y. 2013-14 and is not eligible for assessment year under consideration. 16.4 On perusal of the above, it seems that the AO was of the view that the assessee case is covered u/s 32(1)(i) of the Act which provides fo .....

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pective in nature. However, the assessee s case is that as per the second proviso to Rule 5(1)(a) of the IT rules, an undertaking specified in section in 32(1)(i) may instead of claiming depreciation as per Appendix IA (depreciation on actual coston straight line basis) can exercise its option to claim depreciation as per Appendix-1 (on written down value) and such option has been exercised by the assessee before the due date of furnishing of return of income u/s 139(1) of the Act. 16.5 On revie .....

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ets pertaining to the power plant at Morak and windmill at Jaisalmer in the year under consideration. 16.6 We now refer to the provisions of section 32(1)(ii)(a) of the Act which reads as under: (iia) In the case of any new machinery or plant (other than ships and aircraft) which has been acquired and installed after the 31st Day of March, 2005by an assessee engaged in the business of manufacture or production of any article or thing or in the business of generation or generation and distributio .....

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e actual cost of such machinery and plant. It further provides that a machinery of plant should be a new machinery or plant (other than ships and aircraft) which has been acquired and installed after the 31st day of March, 2005. It further provides that the additional depreciation in new machinery or plant shall be allowed in the hands of the assessee who is engaged in the business of manufacture or production of any article or thing or in the business of generation or generation & distribut .....

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on ble Supreme Court and the various Co-ordinate Benches of the Tribunal that the process of generation of electricity is akin to manufacture of an article or thing, the assessee in the instant case satisfy the requirement that it is engaged in the business of manufacture or production of an article or thing. Now coming to the amendment which has been brought-in by the Finance Act 2012 w.e.f. A.Y. 2013-14whereby the assessee engaged in the business of generation or generation & distribution .....

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on of NTPC Ltd. (supra), M. Satish Kumar (supra) and Damodar Valley Corpn. (supra). No contrary authority has been brought to our notice. In our view, the said amendment cannot be read to negate the settled legal position that generation of electricity is akin to manufacture or production of an article or thing. As held by Coordinate Bench in M Satish Kumar (supra), the said amendment by the Finance Act 2012 gives an impetus to the view that generation of electricity is a manufacturing process. .....

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made under protest against demand of service tax and land tax and booked in other advances. The assessee filed detailed explanation on allowability of the claim. However, the AO held that explanation of the assessee is not acceptable and therefore disallowed the claim of the assessee. 17.2 The Ld. CIT(A) deleted the disallowance by holding that AO has simply disallowed the expenses u/s 43B without any finding. As against this, the assessee has given detailed submission stating that these expens .....

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Merta City on 27.10.2007 against demand for the year 06-07 in view of the order of Rajasthan High Court dt. 10.10.2007. (c) Land Tax of ₹ 54,30,165/- was paid on 07.02.2008 to Sub Registrar, Chechat as per the order of Rajasthan High Court dt. 01.11.2007. 18.1 It was submitted that all these are statutory liabilities. A statutory liability is allowable in the year in which it arises notwithstanding the fact that it is disputed by the assessee and no entries are made in the books of accoun .....

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see during the year which related to an earlier accounting year. The same was claimed as deduction u/s 43B which was disallowed by AO. It was held that there is no part of s. 43B or the IT Act itself which requires that when deduction is claimed on the basis of s. 43B, the assessee must satisfy the twin test of both proving actual payment of the due tax or cess in the previous year in question as well as satisfying the Department that due provision had been made in the books in regard to such du .....

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the year in which the liability for tax accrued or arose. CIT Vs. Dharampal Satyapal Sons (P.) Ltd. 50 DTR 287 (Del.) (HC): Payment of pre-deposit by the assessee on the direction of CESTAT. Though the CESTAT had directed the assessee to make aforesaid payment by way of pre-deposit for stay of the impugned demand and pre-addition for hearing the appeal, indubitably this direction was given keeping in view the total excise duty demand raised by the adjudicating authority under the excise law, the .....

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ly fulfilled and the assessee was entitled to claim the deduction thereof. CIT Vs. Hughes Escorts Communications Ltd. 14 DTR 346 (Del.)(HC): Assessee claimed deduction u/s 43B on the ground that it was required to make special value branch deposit with the custom authorities. The same was disallowed by AO. It was held that liability was required to be discharged by assessee on payment and the assessee had no option but to make payment. Therefore such payment clearly falls within sec. 43B of the .....

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curred liability to pay such tax, duty etc. has no relevance and cannot be linked in the natter of giving benefit of deduction u/s 43B. Therefore, the amount of service tax along with interest paid by assessee is allowable in view of provisions of sec. 43B. 19. The ld DR is heard who has relied on the order of the Assessing officer. 20. We have heard the rival contentions and pursued the material available on record. The demand of service tax of ₹ 13,59,941/- was paid on 09.06.2007 as per .....

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