TMI Blog2017 (12) TMI 296X X X X Extracts X X X X X X X X Extracts X X X X ..... & machinery which was stated to be not claimed in the return of income inadvertently - Held that:- The assessee having not claimed the depreciation eligible to it under law, will not operate as estoppel when relevant facts are available on record. In the circumstances, we do not subscribe to the dismissal of the claim of depreciation allowances stated to eligible to the assessee by the CIT(A). The aforesaid view finds support from plethora of decisions including judgement of Hon’ble Bombay High Court in the case of CIT vs. Pruthvi Brokers & Shareholders Pvt.Ltd. [2012 (7) TMI 158 - BOMBAY HIGH COURT]. We are not inclined at this stage to go into the merits of the claim of depreciation allowance. We set aside and restore the issue to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2009-10. 5. Briefly stated, the AO in the course of scrutiny assessment observed that the assessee has not included the value of statutory duty/levy towards CENVAT component on raw-material lying in the closing stock in violation of Section 145A of the Act. The CENVAT amount attributable to closing stock of raw-material stands at ₹ 59,30,117/-. The AO accordingly added the aforesaid amount to the value of closing stock with reference to section 145A of the Act. Consequently, the taxable income to the assessee stood increased by the aforesaid amount. 6. In the first appeal, the CIT(A) however found merit in the contention of the assessee and deleted the aforesaid addition. 7. Aggrieved, the Revenue is in appeal before the Trib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in view of the provisions of Section 145A of the Act. Assessee filed a detailed reply explaining that it is maintaining exclusive system of accounting in so far as CENVAT is concerned. It was explained that the CENVAT paid on purchases is debited in a separate account and not considered in the purchases and, therefore, it is not claimed as expenditure. It was further explained that even the opening stock is devoid of CENVAT, therefore, any adjustments made in the closing stock would automatically require an adjustment in the opening stock and the exercise will be revenue neutral. This explanation of the assessee was rubbished by the A.O. who was of the firm belief that the provisions of Section 145A have been violated and accordingly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ge method of accounting regularly followed by the assessee without valid reasons. ( 3) Hon'ble Supreme Court in the case of Chainrup Sampatram (1953) reported on 24 ITR 481 has clearly held that profits does not arise out of valuation of closing stock and situs of its arising or accruing where the valuation is made and valuation of unsold stock is necessary part of the process of determining trading results but it can in no sense-be regarded as source of such profit. ( 4) It is clearly held in the case of CIT v/s. Ahmedabad New Cotton Mills reported at 4 ITC 245 that when the opening and closing stock of business are both undervalued, if the method of alteration of both valuation is not adopted, it is perfectly plain that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see read as under:- 1. The ld.CIT(A) has grievously erred in confirming the disallowance of ₹ 83,926/- made by the AO u/s.40(a)(ia) of the Act without proper consideration and appreciation of the facts of the case. In view of facts and submissions filed, the impugned addition ought to have been deleted by the ld.CIT(A). 2. The learned CIT(A) erred in dismissing the ground of appeal claiming depreciation on Plant and Machinery, which was inadvertently not claimed in the return of income on technical grounds. In view of facts and submissions filed, the ld.CIT(A) ought to have allowed the depreciation claim of the appellant.\ 2.1. The learned CIT(A) further erred in not appreciating the fact that as per Explanation 5 of S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ilable on record. In the circumstances, we do not subscribe to the dismissal of the claim of depreciation allowances stated to eligible to the assessee by the CIT(A). The aforesaid view finds support from plethora of decisions including judgement of Hon ble Bombay High Court in the case of CIT vs. Pruthvi Brokers Shareholders Pvt.Ltd. 349 ITR 336 (Bom.). We are not inclined at this stage to go into the merits of the claim of depreciation allowance. We set aside and restore the issue to the file of the AO for its de novo examination with a direction to allow the depreciation allowances in accordance with law regardless of its not having been claimed in the return of income. The AO however shall be entitled to make suitable adjustments/co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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