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TMI Blog2018 (11) TMI 1774X X X X Extracts X X X X X X X X Extracts X X X X ..... g grounds have been raised in this appeal: "1. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. A.O. in making disallowance of a sum of Rs. 7,32,61,262/- on account of depreciation u/s 43(1) read with explanation 7 and 10 of the said section, more so when there was no incriminating material found during the course of search. 2. That in any case and in any view of the matter, action of Ld. CIT(A) in confirming the action of Ld. A.O in making the impugned disallowance of Rs. 7,32,61,262/- on account of depreciation and framing the impugned assessment order is bad in law and contrary to facts and circumstances of the case, void ab initio, beyond jurisdic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... required, as the same are already available on the record. Therefore, these grounds are admitted by keeping in view the ratio laid down by the Hon'ble Supreme Court in the case of National Thermal Power Corporation Vs CIT 229 ITR 383 (supra) wherein it has been held as under: "Both the assessee as well as the Department have a right to file an appeal/cross-objections before the Tribunal. The Tribunal should not be prevented from considering questions of law arising in assessment proceedings, although not raised earlier. The view that the Tribunal is confined only to issues arising out of the appeal before the Commissioner (Appeals) is too narrow a view to take of the powers of the Tribunal." It has been further held as under: "U ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndings have been given in paras 6 to 14 which read as under: "6. Undisputedly, flexible packaging unit of M/s. Dharampal Satyapal Ltd. was demerged into the assessee company. The Id. AR for the assessee contended that no portion of cost of asset acquired by the assessee company was met out of the grant or subsidy or reimbursement of the Government or any other person rather cost of the assets in the hands of assessee company are as per demerger scheme approved and as such, there is no question of reducing the cost of asset and depreciation. 7. However, the AO as well as Id. CIT (A) by invoking the Explanation 7 to section 43 (1) of the Act proceeded to hold that the actual cost of the asset to the assessee company which is a resu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... im of depreciation is revenue neutral?" 11. Before proceeding further, the relevant para of Circular No.37/2016 dated 02.11.2016 issued by the CBDT, relied upon by the ld. AR for the assessee, is extracted as under:- "Chapter VI-A of the Income-tax Act, 1961 ("the Act"), provides for deductions in respect of certain incomes. In computing the profits and gains of a business activity, the Assessing Officer may make certain disallowances, such as disallowances pertaining to sections 32, 40(a)(ia),40A(3), 43B etc., of the Act. At times disallowance out of specific expenditure claimed may also be made. The effect of such disallowances is an increase in the profits. Doubts have been raised as to whether such higher p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... circumstances, the claim of depreciation is revenue neutral. 13. 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. Ld. AR for the assessee relied upon order passed by CIT (A) dated15.07.2016 in assessee's own case for AYs 2012-13 & 2013-14 where in excise duty refund has not been treated in the form of capital subsidy or grant which can be reduced from the cost of assets. 14. Since findings returned by the ld. CIT (A) are based upon the decision rendered by Hon'ble Apex Court in CIT vs. Meghalaya Steels Ltd. - (2016) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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