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2017 (5) TMI 833 - ITAT HYDERABAD

2017 (5) TMI 833 - ITAT HYDERABAD - TMI - Scope of Rectification of mistake - AO issued notice u/s 154 requiring the assessee to explain as to why depreciation claimed by the assessee should not be disallowed as there was no generation of power - Held that:- AO has completed the assessment u/s 153A of the Act and hence all the facts were before him. The power generating unit did not function during the previous year. However, that would not itself justify the order passed by the AO u/s 154 of th .....

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hus we hold that the order u/s 154 passed by the AO is not correct and allow the assessee’s appeal. - ITA No. 1224/Hyd/2016 - Dated:- 12-5-2017 - Smt. Asha Vijayaraghavan, Judicial Member For Assessee : Shri S. Rama Rao For Revenue : Shri K.J. Rao, DR ORDER This is assessee s appeal for the A.Y 2003-04 against the order of the CIT (A)-4 Hyderabad dated 24.06.2016. 2. Brief facts of the case are that the assessee is engaged in generation of electricity, filed its return of income admitting loss o .....

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ion on the assets like canals, power house and other buildings, plant & machinery and transmission lines amounting to ₹ 4,09,30,784. As the assets were not put to use by the assessee, the depreciation claimed on these assets is not allowable and as this mistake is apparent from the notice issued by the AO u/s 154, the same was proposed to be disallowed. Thereafter the AO completed the proceedings u/s 154 concluding that since the assets of the assessee were not put to use for business .....

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) dismissed the appeal confirming the order of the AO. 5. Aggrieved, the assessee is in appeal before us and raised the following grounds of appeal: 1. The order of the learned Commissioner of Income-Tax (Appeals) is erroneous both on facts and in law. 2. The learned Commissioner of Income-Tax (Appeals) erred in determining the appeal without providing proper opportunity. 3. The learned Commissioner of Income-Tax (Appeals) erred in confirming the order passed u/s 154 of the LT. Act without consi .....

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e previous year and that therefore, deprecation is not allowable. 6. The learned Commissioner of Income-Tax (Appeals) ought to have seen that the Assessing Officer should not have disallowed depreciation on the ground that the power generating unit did not function during the year. 7. Any other ground that may be urged at the time of hearing . 6. I heard both the parties. The AO issued notice u/s 154 dt. 22.01.2009 requiring the assessee to explain as to why depreciation claimed by the assessee .....

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nerated. The AO just relied on the Notes to Accounts wherein it is mentioned that the Unit was shut down during the year as no water could be released into Srisailam Right Main Canal. The AO did not consider the explanation and therefore, observed that there is an error in the assessment order. 7. The Hon'ble Delhi High Court in the case of Capital Bus Service (P) Ltd vs. CIT reported in 123 ITR 404 held as follows: Held, that the expression used for the purpose of the business (used in s 10 .....

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if and when some tourist contract materialized. They were not actually run on the road not because they were under repair or were unfit for use for one reason or the other, but only because there were not enough contracts during the year to ply the buses for more than 30 days each. This did not mean that so far as the assessee was concerned it did not employ the trucks for the purposes of business. They were kept ready for operation and they were there only in the business and for use in that b .....

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dy for actual use . 8. The learned Counsel for the assessee also brought to our notice page 21 of the paper book wherein for the immediately preceding year, the assessee received ₹ 41703.44 crores on sale of power and also pointed out to page No.12 wherein it is stated as follows: Your Directors regret to report that during the year under review, no water was released by the authorities from the Srisailam Reservoir due to the drought conditions and inadequate water levels. As a result, the .....

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