TMI Blog2020 (6) TMI 369X X X X Extracts X X X X X X X X Extracts X X X X ..... he time of hearing has also not brought anything on record contrary to the argument advanced by the learned AR. Hence respectfully following the principle laid down in the own case of the assessee by this tribunal, we set aside the finding of the learned CIT (A) and direct the AO to delete the addition made by him. Hence the ground of appeal of the assessee is allowed. Set off of the unabsorbed depreciation against the income of the current year - HELD THAT:- We find merit in the argument advanced by the assessee. Accordingly we set aside the issue to the file of the AO with direction to allow the set off of the unabsorbed depreciation of the earlier years after considering the appeal of the assessee for the assessment year 2009-10. Hence the ground of appeal of the assessee is allowed for the statistical purposes. Addition for the advance against depreciation - HELD THAT:- It is the case of the assessee that such advances to be adjusted with the power so supplied in the future. We, thus, having regard to the facts and circumstances of the case find no infirmity in the order passed by the Learned C1T(A) in making such direction upon the Ld. AO with the guidelines framed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 80-IA (4) - HELD THAT:- Assessee did not claim the deduction under section 80-IA (4) of the Act, for the reason that there was no positive income. However, in our considered view if there any positive income in the hands of the assessee on account of the disallowances made by the AO in the assessment proceedings then the assessee in our considered view should be entitled for the deduction under section 80-IA(4) of the Act, as per the provisions of law. As such we do not find any infirmity in the direction of the learned CIT (A). Hence the ground of appeal of the revenue is dismissed. Order being pronounced after ninety (90) days of hearing - COVID-19 pandemic and lockdown - HELD THAT:- Taking note of the extraordinary situation in the light of the COVID-19 pandemic and lockdown, the period of lockdown days need to be excluded. See case of DCIT vs. JSW Limited [ 2020 (5) TMI 359 - ITAT MUMBAI ] - I.T.A. No. 1510/Ahd/2016 And I.T.A. No. 1532/Ahd/2016 - - - Dated:- 4-6-2020 - Shri Rajpal Yadav, Vice President And Shri Waseem Ahmed, Accountant Member For the Assessee : Shri S. N. Soparkar, Sr. Advocate with Shri Parin Shah, A.R. For the Revenue : Sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,058/- only. 6. The learned AR before us filed a paper book running from pages 1 to 345 and claimed that the own fund of the assessee exceeds the amount of investments as evident from the financial statement of the assessee which is placed on pages 303 to 345 of the paper book. Accordingly, the learned AR for the assessee claimed that there cannot be any disallowance of interest expenses. 7. On the other and the learned DR vehemently supported the order of the authorities below. 8. Both the learned AR and the DR before us relied on the order of the authorities below to the extent favourable to them. 9. We have heard the rival contentions of both the parties and perused the materials available on record. Admittedly the own fund of the assessee exceeds the amount of investment. Accordingly presumption can be drawn that the borrowed fund was not utilised for such investments. Accordingly There cannot be any disallowance of any interest expenses in view of the judgment of the Hon'ble Gujarat High Court in the case of PCIT v. Shreno Ltd. reported in 409 ITR 401 wherein it was held as under: 12. The exposition of law made by the Supreme Court in case of S. A. Builder ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w. 16. We have heard the rival contentions of both the parties and perused the materials available on record before us. At the outset we note that this tribunal in the own case of the assessee (supra) involving identical facts and circumstances has decided the issue in the favour of the assessee. The relevant extract of the order is reproduced as under: 11. Heard the respective parties, perused the relevant materials available on record. It appears from the records that while rejecting the case of the assessee, the Learned AO observed that the assessee is following mercantile system where expenditure is recorded if it is due during the previous year irrespective of fact whether it is paid during the previous year or not. Under the above circumstances, since the assessee is consistently following the mercantile system of accounting, expenses incurred prior to relevant accounting period are not allowable as expenses in subsequent years. On this issues he retied upon the judgment passed in the matter of Indermani Jatia v. CIT, 351ITR 298 (SC). The view has been reiterated by the Ld. CIT(A) as well. 12. It is a settled principle of law that when the assessee followed the m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment year is before the ITAT in ITA No. 307/AHD/2014. Accordingly the learned AR before us prayed to direct the AO to allow the set off of the unabsorbed depreciation after considering the outcome of the appeal pending before the ITAT for the assessment year 200910. The learned DR raised no objection if the matter is set aside to the file of the AO for fresh adjudication as per the provisions of law. 20. We heard the rival contentions of both the parties and perused the materials available on record. We find merit in the argument advanced by the learned AR for the assessee. Accordingly we set aside the issue to the file of the AO with direction to allow the set off of the unabsorbed depreciation of the earlier years after considering the appeal of the assessee for the assessment year 2009-10. Hence the ground of appeal of the assessee is allowed for the statistical purposes. 21. The next issue raised by the assessee is that the learned CIT (A) erred in confirming the order of the AO by sustaining the addition of ₹ 25,42,00,000/- for the advance against depreciation. 22. At the outset the learned counsel for the assessee submitted that the identical issue has be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d C1T(A) has been pleased to direct the Learned AO to verify the claim of the appellant in the event the appellant is able to prove that any income has been taxed in the subsequent assessment year is in fact adjusted against advance of₹ 14.92 crores, such income would not be liable to be taxed in the year in which the appellant company has shown any income. Being aggrieved by the same the assessee is before us. 16. We have heard the respective parties perused the relevant materials available on record. 1n terms of the power projects agreement as it appears from the records the appellant company has been raising invoices to Gujart Ujja Vikas Nigam Ltd. (GUVNL) on the calculation of fixed charges as mentioned therein. One of such components of fixed charges is depreciation. 1t was further agreed between the two parties that in the year the appellant since has been facing heavy cash flow due to repayment of debenture, Gujarat Urja Vikas Nigam Ltd. (GUVNL) will give amount in advance to the appellant by way of advance depreciation and the same would be recovered against future bill. Hence, the amount of ₹ 14.92 has been received as advance by the appellant. However, as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion has changed its accounting policies and classified capital spares under the head fixed assets. Thus the assessee claimed depreciation at the rate of 15% on the value of such capital spares for the year under consideration amounting to ₹ 3,23,52,664/-. However, the AO found that the amount of amortization comes to ₹ 1,54,06,030/- as per the previous model of accounting used by it in the immediate preceding assessment year. Thus the AO found that the assessee by switching the policy of treating the capital spares as fixed assets has claimed excessive depreciation amounting to ₹ 1,69,46,634/-. Accordingly the AO disallowed the excess amount of depreciation by adding to the total income of the assessee. 27. Aggrieved assessee preferred an appeal to the learned CIT (A). 28. The assessee before the learned CIT (A) submitted that there is no provision under the Act, allowing the amortization on the capital spares over a period of 14 years. As such the provisions of the Act mandates to claim the depreciation on the capital spares at the rate of 15% which has been corrected by the assessee from the year under consideration. The assessee also challenged the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igh Court in the case of CIT v. Ganga Charity Trust reported in 162 ITR 612 wherein it was held as under: Regarding the change in the system of accounting, the assessee-trust experienced difficulty in the assessment year 1971-72 because of non-receipt of interest from parties with which it had placed its funds byway of deposits and so it decided to switch over to cash system of accounting, so that it might not be required to pay income-tax on notional income. There is nothing in the Act which precludes the assessee, who bona fide desires to switch over to another system of accounting, from doing so. There was no finding of fact that the switch over to the cash system of accounting in the previous year relevant to the assessment year 1972-73 was not bona fide. Besides, it was not shown by the department that the change lacked durability or regularity and was merely a stop-gap arrangement to avoid payment of tax. In such a situation one failed to understand why a bona fide assessee should be precluded from switching over to another system of accounting which he found convenient and which would reflect his real income. Circumstances had compelled the trustees to switch over to ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said order is reproduced below: In view of above discussion, the computation under clause (f) of Explanation 1 to section 115JB(2), is to be made without resorting to the computation as contemplated under section 14A, read with rule 8D of the Income-tax Rules, 1962. The ratio laid down by the Hon'ble Tribunal is squarely applicable to the facts of the case on hand. Thus it can be concluded that the disallowance made under section 14A r.w.r. 8D cannot be resorted while determining the expenses as mentioned under clause (f) of explanation 1 to section 115JB of the Act. However, it is also clear that the disallowance needs to be made with respect to the exempted income in terms of the provisions of clause (f) to section 115JB of the Act while determining the book profit. In holding so, we draw support from the judgment of Hon'ble Calcutta High Court in the case of CIT v. Jayshree Tea Industries Ltd. in GO No.1501 of 2014 (ITAT No.47 of 2014) dated 19.11.14 wherein it was held that the disallowance regarding the exempted income needs to be made as per the clause (f) to Explanation-1 of Sec. 115JB of the Act independently. The relevant extract of the judgment is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w.r. 8D of Income Tax Rules. Hence, the ground of appeal of the assessee is partly allowed. 42. In the result, appeal of the assessee is partly allowed for statistical purposes. Coming to the ITA No. 1532/A HD/2016, an appeal by the revenue. 43. The 1st issue raised by the revenue is that the learned CIT (A) erred in deleting the disallowance made by the AO under section 14A read with rule 8D of Income Tax Rule. 44. At the outset we note that the issue raised by the revenue has already been adjudicated along with the appeal of the assessee bearing ITA No. 1510/AHD/2016 vide paragraph number 9 of this order. For the detailed discussion, please refer the relevant paragraph. Respectfully following the same we dismiss the ground of appeal raised by the revenue. 45. The next issue raised by the revenue is that the learned CIT (A) erred in allowing the claim of the assessee under section 80-IA (4) of the Act though there was no claim made in the income tax return. 46. The assessee in the year under consideration has not claimed any deduction under section 80-IA(4) of the Act, as there was no positive business income for the year under consideration. However the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vid 19 epidemic, and this lockdown was extended from time to time. As a matter of fact, even before this formal nationwide lockdown, the functioning of the Income Tax Appellate Tribunal at Mumbai was severely restricted on account of lockdown by the Maharashtra Government, and on account of strict enforcement of health advisories with a view of checking spread of Covid 19. The epidemic situation in Mumbai being grave, there was not much of a relaxation in subsequent lockdowns also. In any case, there was unprecedented disruption of judicial wok all over the country. As a matter of fact, it has been such an unprecedented situation, causing disruption in the functioning of judicial machinery, that Hon'ble Supreme Court of India, in an unprecedented order in the history of India and vide order dated 6.5.2020 read with order dated 23.3.2020, extended the limitation to exclude not only this lockdown period but also a few more days prior to, and after, the lockdown by observing that In case the limitation has expired after 15.03.2020 then the period from 15.03.2020 till the date on which the lockdown is lifted in the jurisdictional area where the dispute lies or where the cause of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... functioning of our justice delivery system. Undoubtedly, in the case of Otters Club v. DIT [(2017) 392 ITR 244 (Bom)], Hon'ble Bombay High Court did not approve an order being passed by the Tribunal beyond a period of 90 days, but then in the present situation Hon'ble Bombay High Court itself has, vide judgment dated 15th April 2020, held that directed while calculating the time for disposal of matters made time-bound by this Court, the period for which the order dated 26th March 2020 continues to operate shall be added and time shall stand extended accordingly . The extraordinary steps taken suo motu by Hon'ble jurisdictional High Court and Hon'ble Supreme Court also indicate that this period of lockdown cannot be treated as an ordinary period during which the normal time limits are to remain in force. In our considered view, even without the words ordinarily , in the light of the above analysis of the legal position, the period during which lockout was in force is to excluded for the purpose of time limits set out in rule 34(5) of the Appellate Tribunal Rules, 1963. Viewed thus, the exception, to 90-day time-limit for pronouncement of orders, inherent in rule 34 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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