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2019 (5) TMI 540

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..... n of any article or thing. Considering relevant provisions of Section 32(1)(iia) which was prevailing at the relevant time, i.e. during the year under consideration, it cannot be said that the ITAT by applying the ratio of decision of VTM Ltd. [2009 (9) TMI 35 - MADRAS HIGH COURT] and Hi Tech Arai Ltd. [2009 (9) TMI 60 - MADRAS HIGH COURT] has committed any error in deleting the additionon account of disallowance of additional depreciation of Wind Electric Generator. Disallowance on account of unutilized CENVAT credit - appellant has been following exclusive method for accounting CENVAT as against inclusive method mandated under section 145A - HELD THAT:- T he identical issue has already been decided in the identical facts and circumstances of the case in the matter of CIT-vs-Bell Granito Ceramica Ltd. [2012 (6) TMI 879 - GUJARAT HIGH COURT] by the Hon’ble Jurisdictional High Court in favour of the assessee as held under the scheme of the excise duty, the assessee incurs liability to pay excise duty only upon both the events taking place, namely manufacture of excisable goods and removal of excisable goods; excise duty is not therefore includible in the valuation of closin .....

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..... e/book profit. The appellant prays that the order of CIT(A) on the above grounds be set aside and that of the Assessing Officer be restored to the above extent. The appellant craves, to leave, to amend or alter any ground or add a new ground which may be necessary. Ground No.1 3. This ground relates to the order passed by the Learned CIT(A) in deleting the disallowance made u/s 40(a)(i) in respect of consultancy and supervision charges of ₹ 71,43,952/- 4. The assessee filed its return of income on 26.09.2011 declaring total income of ₹ 2,35,39,500/- which was processed u/s 143(1) of the Act. Under scrutiny, notice dated 18.09.2012 u/s 143(2) was served upon the assessee on 22.09.2012 by the RPAD along with a questionnaire dated 28.11.2012 followed by a further notice u/s 143(2) r.w.s. 129 and 142(1) of the Act dated 02.05.2013 due to change of incumbent. Upon verification of the details during the course of assessment proceeding, it was found that the assessee company had made payment to non-residents amounting to ₹ 71,43,952/- (₹ 63,76,114/- + ₹ 1,36,260/- for consulting charges and ₹ 6,31,578/- for supervision charges). The assessee was require .....

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..... order passed by the authorities below. The revenue s appeal is found to be devoid of any merit and thus dismissed. Ground No.2 7. The second ground relates to deletion of disallowance of additional depreciation of ₹ 1,53,74,316/-. 8. The assessee-company had purchased plant and machinery of ₹ 153,743,158/- on which additional depreciation of ₹ 1,53,74,316/- (less than 180 days) has been claimed. The entire plant and machinery was on lease and accordingly rental income of ₹ 5,77,44,000/- was shown by the assessee. By and under a letter dated 26.12.2013, the assessee was directed to explain as to why said additional depreciation should not be disallowed. The issue was finalized by the Learned AO ultimately by disallowing the additional depreciation and the depreciation has been restricted only 15% i.e. ₹ 1,53,74,316/- added to the total income of the assessee, which in turn was deleted by the Learned CIT(A) following his predecessor s order in assessee s own case for A.Y. 2010-11. Hence, the instant appeal before us. 9. At the very outset of the hearing of the matter, the Learned Sr. Counsel appearing for the assessee submitted before us that the issue i .....

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..... ) added ₹ 85,75,341/- to the total income of the assessee. 25. Aggrieved assessee preferred an appeal to ld. CIT-A, who deleted the addition made by the AO following the co-ordinate bench order in the case of Heavy Metal and tubes Ltd in ITA no. 1951/A/2011. The ld. CIT-A also relied on the judgment of Hon ble Gujarat High court in the case of Diamines & Chemicals Ltd reported 42 Taxman.com 193 where depreciation was allowed by holding that there is no requirement of correlation between the assets acquired and manufacturing activity. 26. The learned DR before us vehemently supported the order of the AO whereas the learned AR before us reiterated the submissions as made before the learned CIT-A. The learned AR vehemently supported the order of learned CIT-A. 27. We have heard the rival contentions and perused the materials available on record. The issue in the instant case relates to the fact whether the assessee is eligible for additional depreciation on the machinery which have been given on lease. The AO was of the view that the assessee has not used the machineries in connection with the manufacturing activity. Therefore the AO disallowed the additional depreciation cl .....

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..... nt of disallowance of additional depreciation of Wind Electric Generator. 3. We see no reason to interfere with the impugned judgment and order passed by the ITAT. No question of law, much less substantial question of law arises in the present Tax Appeal. Hence, the present Tax Appeal deserves to be dismissed and is accordingly dismissed. 27.3 We also find support and guidance from the order of this tribunal in the case of Heavy Metal and tubes Ltd (supra) wherein it was held as under: 7. We have heard the rival submissions and perused the material on record. It is an undisputed fact that Assessee has installed a Windmill during the year under review. We further find that CIT(A) while deciding the issue has given a finding that the Assessee is already engaged in the business of manufacturing of production of Pipes and Tubes and has also fulfilled all the conditions laid down for claim of additional depreciation. We further find that the Hon'ble Gujarat High Court in the case of CIT vs. Diamines and Chemicals Ltd. (supra) has concluded that while claiming the deduction u/s. 32(1)(iia) setting up Windmill has nothing to do with the power industry and what is required to be satisf .....

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..... on facts and in law in making an impugned addition for the alleged unutilized Cenvat Credits of ₹ 23,64,484/- by not appreciating the submission made by the Appellant in reply dt.06.01.14 vide para-1 in right perspective which was although reproduced in the assessment order but however, the ld. AO completely failed to controvert / counter the said submission with justifiable reason in support for such impugned addition made. Instead, the ld. AO went on to discuss theoretically and academically to thrust the point to justify the addition which is completely irrelevant. In view of the submission made under para-1 of reply dt.06.01.14, the ld. AO ought to have accepted the same as correct and valid and thus, ought to have refrained from making such addition which has resulted in double addition. It is further submitted that Unutilized Cenvat Credit of ₹ 23,64,484/- cannot be treated as income, for which, an attention to be drawn to the Accounting Standard provisions on valuation of Inventories. The said AS - 2 "Valuation of Inventories" mandates that the cost of inventories should comprise all costs of purchase, costs of conversion and other costs incurred in br .....

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..... t be linked with the accounting precedence. Since, the Appellant has to draw your kind attention to the fact that the statement No. 12 stating particulars in Form 3CD for clause 22(a) gives the reconciliation effect on profitability by following inclusive method and giving the effect of Cenvat taxes by following the said principles, which cannot be coincided with the accounting methodology for refundable taxes. Considering the above logical reasoning along with the accounting made by the Appellant as per the prevailing practices laid down as per law, the Appellant would like to once again invite your kind attention to the fact that Cenvat receivable amount on purchase and expenses have been utilized so far as the output tax liability related to the year was concerned and the balance portion as the same pertains to Cenvat credit was taken as receivable balance and rightly shown under the head Loans and Advances. Hence, taking the view contrary to this and taxing the said unutilized credit amount of receivable balance of ₹ 23,64,484/- as income would result in to cascading effect of taxation. In view of such facts, the said amount cannot be taxed once again and hence, the addit .....

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..... the cost of inventory should comprise all cost of purchase, cost of conversion, and other cost incurred in bringing inventories to their present location and condition. The section further provide that the cost of purchase consist of purchase price including duties and taxes(other than those subsequently recoverable from the taxing authorities) even in such case duties and taxes can only be included when it is not recoverable. The AO has also mentioned in his order that the appellant is maintaining exclusive method of accounting. Therefore, if the addition is confirmed on the analogy of the AO, it may lead to double taxable. Therefore, the addition made of ₹ 23,64,484/- is not justified and is directed to be deleted. This ground is allowed in favour of the appellant. 13. At the time of hearing of the instant appeal the Learned Sr. Counsel appearing for the assessee submitted before us that the identical issue has already been decided in the identical facts and circumstances of the case in the matter of CIT-vs-Bell Granito Ceramica Ltd. reported in Tax Appeal No.436 of 2011 with 437 of 2011 by the Hon ble Jurisdictional High Court in favour of the assessee. The Learned DR, ho .....

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..... has come on the statute book only from 1st April, 1999 but what is more material is that the same relates to inclusion in the value of inventory the amount of any tax, duty etc. paid or liability incurred for the same under any law in force. Meaning thereby such tax, duty, etc. should have been actually paid or should be actually due and payable under the law applicable to such tax, duty, etc. in force. Otherwise even Section 145A will also not carry case of Revenue any further. CIT v. English Electric Co. of India Ltd. (2000) 243 ITR 512 (Mad) and CIT v. Dyanavision Limited (2004) 267 ITR 600 (Mad) was also considered. And finally concluded that under the scheme of the excise duty, the assessee incurs liability to pay excise duty only upon both the events taking place, namely manufacture of excisable goods and removal of excisable goods; excise duty is not therefore includible in the valuation of closing stock. We find that the issue is squarely covered in favour of the assessee and against the Revenue by the decision of Hon'ble jurisdictional High Court in Narmada Chematur Petrochemicals Ltd. (supra). Accordingly, this common issue in the appeals of the Revenue is dismissed. .....

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..... 8377; 7,18,178/-. 19. The issue involved in this ground of appeal is identical to that of the issue already been dealt with by us in ITA No.1247/Ahd/2016 for A.Y. 2011- 12 and in the absence of any changed circumstances the same shall apply mutatis mutandis. Hence, this ground of appeal preferred by the revenue is also dismissed. Ground No.3 20. This ground relates to deleting disallowance of ₹ 1,38,489/- made u/s 14A r.w.r. 8D of the Income Tax Rule, 1962. 21. During the course of assessment proceeding, it was found that the appellant has invested to the tune of ₹ 25,01,917/- as on 31.03.2011 and 31.02.2011. However, appellant-company has not disallowed any expenditure in terms of interest cost, administrative cost or any other expenses with regard to making and managing such investment. By and under an order sheet entry dated 05.01.2015, the assessee was asked as to why the disallowance should not be made in terms of provisions of section 14A of the Act in the manner as prescribed under Rule 8D of the Income Tax Rules, 1962. The assessee s case was this that the assessee has not earned any exempted income in the nature of dividend from shares / mutual funds neither cl .....

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