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TMI Blog2019 (2) TMI 1364X X X X Extracts X X X X X X X X Extracts X X X X ..... nt was also taxed in Assessment Year 2012-13." I.T.A. No. 6860/DEL/2015 (Revenue's appeal) 1. That the order of the learned CIT(Appeals)is erroneous & contrary to facts & law. 2. That On the facts and in the circumstances of the case and in law, the learned CIT (A] has erred in allowing the claim of depreciation during the year even when in the balance sheet, it is showing all the assets in work in progress. 3. That On the facts and in the circumstances of the case & in law, the Ld. CIT (A) has erred in allowing the interest income of Rs. 3,11,740/- to be adjusted against the unallowable depreciation of the current year. 4. That On the facts and in the circumstances of the case and in law, the Ld. CIT (A) has erred in law in allowing additional ground of appeal regarding allowance of current years depreciation on WDV of assets arrived at without reducing the depreciation for AY 2009-10 & 2010-11 at Rs. 18,26,81,877/- instead of unallowance depreciation. 5. That the appellant craves leave to add, to alter, or amend any ground (s) of the appeal raised above at the time of the hearing. 3. The assessee company was engaged in the business of Railway Transportation. The Asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nstructed and handed over the same to South Central Railway (SCR) for Operation & Maintenance (O&M) of the aforesaid railway line. This Railway line came into operation in November 2008. The same was pointed out by the Ld. AR at note no 2A of Schedule 7 being Notes to Accounts as given in B/sheet. Sharing of revenues between the assessee company, SCR and various railway zone took prolonged discussion before the same could be finalized. The agreement of O & M between the assessee company & SCR was signed on 12/01/2012. The impugned year is A.Y. 2011-12 i.e. for the previous year ending 31.03.2011. Thus, agreement was signed almost one year after the closure of the financial year. Due to this reason Revenues and Expenditure up to March, 2011 could not be depicted in the accounts. This fact was disclosed in Note 4 pertaining to Accounting policy and note 2A pertaining to notes to accounts. SCR for the first time rendered the accounts for the period November 2008, to November 2011 vide its letter dated 09/05/2012. Due to these peculiar circumstances the assessee company had no option but to incorporate revenue and expenditure from November 2008, to March 2011, for those years in the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loss of Revenue. This aspect was taken note by the Assessing Officer in his order. Thus, the Assessing Officer on the basis of South Central Railway Letter taxed income of Rs. 8,20,74,197/- pertaining to the Assessment Year 2011-12 under the head business. Thus, the Ld. AR submitted that when Assessing Officer is admitting that the assessee has conducted business operations during the year then how in the same basis he disallowed depreciation since it has not been used the assets during the year for the purposes of its business. In-fact, the assessee conducted business in this year as well which was an admitted fact by the Revenue authorities. The Ld. AR relied upon the decisions of the K. M. Sugar Mills Ltd. 373 ITR 42, CIT(A) Vs. Bhrat Carbon & Ribbon Manufacturing Company Ltd. 239 ITR 535 Supreme Court and Kedarnath Jute Mills Ltd. 82 ITR 363. The Ld. AR also relied upon the case of Tuticorin Alkali Chemicals Vs. CIT(A) 227 ITR 172 (S.C). The Ld. AR submitted that the Assessing Officer 's main contention of disallowance of depreciation to the assessee is that in accounts fixed assets have not been capitalized nor any depreciation has been charged. If this plea is accepted then ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ets as capital work in progress, the depreciation thereon is still allowable under the provisions of Explanation 5 to section 32 wherein the legislature clarified by Finance Act, 2001 w.e.f. 01.04.2002, as a matter of abundant precaution, that depreciation is allowable, irrespective of the fact as to whether or not the assessee has claimed the deduction in the computation of total income. Moreover, as the appellant has rightly stated, the Supreme Court in the case of Kedarnath Jute Mills (82 ITR 363) has taken the view that whether or not assessee entitled to a particular deduction depends on the provision of law relating thereto and not the view the assessee might take of his rights nor can the existence or absence of entries in the books of accounts be decisive or conclusive in the matter. The Supreme Court in the latest decision of KM Sugar Mills Ltd. (373 ITR 42) has held that when the assessee had proved the ownership and user of gas cylinders for business purposes and the income from leasing of gas cylinders was treated as business income, the assessee was entitled to depreciation u/s 32 and the mere fact that the assessee's own manufacturing unit has not started functioning ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d depreciation to the appellant for the year under challenge, all the other limbs of the grounds stands answered. As far the question of taxing income of Rs. 8,20,74,197/- in AY 2011-12 & 2012-13 twice is concerned, I agree with the appellant that it amounts to double taxation which is prohibited by law. This proposition of law has also been laid down in the under mentioned decisions as relied upon by the appellant:- - LAXMIPAT SINGHANIA v CIT 72 ITR 291, 294 (SC) - BHIM SEN KHOSLA v CIT 133 ITR 667 (DEL) - PT. SHEONATH PRASAD SHARMA v CIT 66 ITR 647 (ALL) - ARK INVESTMENTS LTD v ITO 13 ITD 65 (CHENNAI) - R. NATRAJAN v ACIT (TS-386-ITAT-2012) (CHNY) - CIT v. NAGARJUNA FERTILIZERS & CHEM LTD. 373 ITR 252 (T&AP) 8.1.3 Since it has been held that the said income has to taxed in this year however, the appellant is at liberty to seek remedial action in AY 2012-13 for deletion of the amount of Rs. 8,20,74,197/- from the assessed income of that year. With these observations ground no. 4 is treated as partly allowed." The CIT(A) rightly observed that mere quantification and classification in accounts cannot deter assessee from claiming depreciation when factually the assets ..... X X X X Extracts X X X X X X X X Extracts X X X X
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