TMI Blog2018 (9) TMI 1791X X X X Extracts X X X X X X X X Extracts X X X X ..... is allowable deduction and as such, the benefit of deduction u/s 80IC is allowable on profits enhanced by the disallowance made u/s 32 and in these circumstances, the claim of depreciation is revenue neutral. So far as question of treating the refund of excise duty as part of the cost is concerned, it is the case of the assessee that the entire cost has been paid by the assessee for plant & machinery and as such, it cannot be reduced from the cost of asset. Assessee relied upon order passed by CIT (A) dated 15.07.2016 in assessee’s own case for AYs 2012-13 & 2013-14 wherein excise duty refund has not been treated in the form of capital subsidy or grant which can be reduced from the cost of assets. Since findings returned by the CIT ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... permissible in the law. ii) The ld CIT(A) has ignored the fact that the Excise Refunds used for the development of the backward area by New Industries as per Industrial Policy of Government of India for North East state is not a part of government grants. iii) The ld CIT(A) has ignored the fact that the assessee has complied with the recommendations of ICAI for recording such Excise Refunds in books of accounts and has complied with the Accounting Standard on Deferred Government Grant 2) That on the facts and circumstances of the case, the Ld. CIT(A) has grossly erred in upholding the disallowance of the depreciation amounting to ₹ 6,40,38,391/- illegally. Therefore the same is liable to be deleted. 2. Briefly stated th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the following additional grounds :- (i) That even otherwise, on facts and circumstances of the case, the appellant is entitled to claim benefit of statutory deduction u/s 80IC on additional income arising from disallowance of claim of depreciation. (ii) That in view of CBDT Circular No. 37/2016 dated 02.11.2016, the benefit of deduction u/s 801C is admissible on profits enhanced by the disallowance made u/s 32 and as such claim of depreciation is revenue neutral. Since the additional grounds sought to be raised by the assessee are legal grounds which go to the roots of the case and necessary for complete adjudication of the controversy at hand, the assessee is allowed to raise the additional grounds challenging the availability o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ual cost of resulting company shall also be nil and as such, actual cost of asset is to be reduced by the amount of ₹ 78,32,12,592/-. The ld. DR further contended that the excise duty is reimbursement to the assessee. 10. In the backdrop of the aforesaid facts and circumstances of the case and arguments addressed by the ld. AR of the parties to the appeal, the first question arises for determination in this case is:- as to whether the assessee is entitled to claim benefit of statutory deduction u/s 80IC of the Act on additional income arising from disallowance of claim of depreciation and that the benefit of deduction u/s 80IC is admissible on profits enhanced by the disallowance made u/s 32 or that the claim of depreciation is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Bare perusal of the operative part of the Circular (supra) goes to prove that disallowance made by the assessee u/s 32 of the Act relating to business activity against which deductions have been claimed under Chapter VI-A, as in the instant case, results in enhancement of the profits of the eligible business and that deduction under Chapter VI-A is admissible on profits so enhanced by the disallowance. In these circumstances, the claim of depreciation made by the assessee company of ₹ 6,40,38,391/- is allowable deduction and as such, the benefit of deduction u/s 80IC is allowable on profits enhanced by the disallowance made u/s 32 of the Act and in these circumstances, the claim of depreciation is revenue neutral. 13. So far as q ..... X X X X Extracts X X X X X X X X Extracts X X X X
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