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TMI Blog2015 (5) TMI 1163X X X X Extracts X X X X X X X X Extracts X X X X ..... ) erred in confirming the action of the Assessing Officer by denying the depreciation on moulds (plastics) at the rate of 30% claimed by the appellant and restricting the claim to the reduced rate of 15% and thus adding a sum of Rs. 1,55,48,775/- to the total income of the appellant. The appellant prays that the depreciation on moulds (plastics) may kindly be allowed @ 30%. 3. On the facts and in the circumstances of the case and in law, the Hon'ble CIT (A) erred in directing the AO to make adjustment in respect of unutilized MODVAT credit u/s 145A. The Hon'ble CIT (A) failed to take cognizance of the fact that adjustments u/s 145A was already made by the appellant and therefore, CIT (A) ought to have allowed the claim of the appellant and delete the adjustments made by the learned AO." 3. Briefly stated relevant facts of the case are that the assessee is engaged in the business of manufacturing and trading of TV sets, washing machines and air-conditions. Assessee filed the return of income on 29.9.2008 declaring the total income of Rs. 23,14,21,647/-. Assessing Officer completed the assessment u/s 143(3) of the Act the assessed income was determined at Rs. 25,24,95,191/-. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e's appeal on this ground. Thus, aggrieved with the said decision of the CIT (A), assessee is in further appeal before us. 8. During the proceedings before us, it was brought out by making a reference to the balance sheet that major investments are only in subsidiary companies, and further that in the current Assessment Year no fresh investment have been made. It was also submitted, on the basis of the balance sheet placed in the Paper Book, that the aggregate of share capital, reserves and surplus and other non-interest bearing funds was more than the value of investments in shares, and therefore, no interest expenditure could be attributable to the investments, following the ratio of the judgment of the Hon'ble Bombay High Court in the case of CIT vs. Reliance Utilities [2009] 313 ITR 340 (Bom.). 9. It has also been submitted that in so far as the investment in subsidiary companies is concerned, the same is intended for holding controlling stake in the group concerns and not for earning any income out of investment, and therefore, the same is outside the purview of section 14A of the Act. The aforesaid proposition is in line with the decision of the Tribunal in the case of Garw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evant record and the propositions laid down in the precedents, we are of the opinion, when the assessee has brought out a case that no expenditure other than that disclosed in the return, has been incurred for earning the income which does not part of the total income, and in the absence of finding by the Assessing Officer that expenditure has been incurred for earning the exempt income the provisions of section 14A could not be invoked to make an additional disallowance under the facts and circumstances of the present case. Accordingly, on Ground no.1 assessee succeeds. 13. Ground no.2 relates to the allowance of depreciation on moulds (plastics) at the reduced rate of 15% as against 30% claimed by the assessee and thus, disallowing excess depreciation of Rs. 1,55,48,775/-. In this regard, at the time of hearing, Ld Representative submitted that an identical issue came up for adjudication before the ITAT in assessee's own case for the Assessment Years 2005-06; 2006-07 and 2007-08 and the Tribunal has consistently decided the issue in favour of the assessee, copies of which are placed in the Paper Book. In support of his submission, Ld Representative read out the relevant portions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith the claim and contention of the assessee, Assessing Officer worked out the adjustment under the provisions of section 145A of the Act and added an amount of Rs. 27,15,738/- to the returned income of the assessee. Aggrieved, assessee carried the matter in appeal before the CIT (A). 18. During the proceedings before the first appellate authority, assessee reiterated the submissions made before the Assessing Officer. Further, it was submitted before the CIT (A) that even though the assessee chose to follow the exclusive method of accounting, no adjustment is required to be made u/s 145A during the year in view of the guidance note on the tax audit u/s 44AB of the Act issued by the Institute of Chartered Accountants of India (ICAI). After considering the submissions of the assessee, CIT (A) followed the decision of his predecessor for the earlier years and directed the Assessing Officer to make adjustment as per the direction given thereof for the Assessment Year 2006-2007. Aggrieved and dis-satisfied with the decision of the CIT (A), assessee is in further appeal before us by raising the aforementioned Ground no.3. 19. During the proceedings before us, Ld Representative for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the value of excise duty. This contention of the assessee shall be verified by the Assessing Officer and appropriate adjustment for the same is directed to be given. The Assessing Officer is also directed to give adjustment to the assessee of the excise duty portion of the inventory lying with the assessee, which has not moved from the premises of the assessee. The Assessing Officer is also directed to give deduction u/s 43B on the component of the excise duty which is paid by the assessee before the due date of filing the return in respect of both the years. With these observations, we consider all these grounds partly allowed in the manner aforesaid." 22. Considering the above, we are of the opinion that the issue being the consistency to be followed in the calculation of closing stocks in 'inclusive method' as prescribed by the ICAI as well as respectfully following the aforesaid decision of the coordinate Bench, ITAT the matter needs to be restored back to the file of the Assessing Officer with similar directions as given in the earlier years. Accordingly, Ground no.3 raised by the assessee is allowed for statistical purposes. 23. In the result, appeal of the assessee is par ..... X X X X Extracts X X X X X X X X Extracts X X X X
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