TMI Blog2020 (6) TMI 695X X X X Extracts X X X X X X X X Extracts X X X X ..... eriod expenses and foreign exchange fluctuation in assessment year 2011-12 and write off of earnest money deposit in assessment year 2012-13. We, therefore, restore the issue back to the AO to consider the issue afresh after giving due opportunity of hearing to the assessee. Disallowance of depreciation on technical know- how - HELD THAT:- We are unable to fathom what the Revenue was attempting to do on the issue Revenue has not disputed the genuineness of the claim of expenses. It is not the Revenue s case that the impugned expenses were bogus. What it has only done is that it has treated the R D expenditure incurred by the assessee as revenue in nature as opposed to capital treated by the assessee. Accordingly, it has resulted in a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itsar [(in short referred to as CIT(A) ] both dated 03.02.2017 relating to assessment years 2011-12 and 2012-13 respectively, passed u/s 250(6)) of the Income Tax Act, 1961 (hereinafter referred to as Act . 2. At the outset itself, the Ld.Counsel for the assessee drew our attention to the fact that a fire had broken out at its premises at plot No.196, Phase-I, Industrial Area Panchkula on 13.06.2013 in which all stock, machinery, all its equipments, furniture, computers software and all documents relating to sale, purchase, assets and liabilities were destroyed. That during assessment proceedings for the impugned year this fact was brought to the notice of the AO also. He further drew our attention to the copy of the fire report issued ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Learned Commissioner of Income Tax (Appeals)-II has failed to appreciate the facts and circumstances of the case and has thereby erred in sustaining the following additions: a.) Disallowance of earnest money deposit written off of ₹ 73,33,358/-. b.) Disallowance of ₹ 16935691/- on account of depreciation on technical know-how. 4. The Ld.Counsel for the assessee contended that the disallowance of prior period expenses, foreign exchange fluctuation and earnest money deposit had been made and confirmed since the assessee was unable to substantiate its claim with evidence. Referring to the facts of each disallowance he pointed out that in assessment year 2011-12 the AO had noted from the tax audit report furnished b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see pointed out that similarly in assessment year 2012-13 the AO had disallowed the earnest money deposit written off by the assessee of ₹ 73,33,348/- which it had been explained as earnest money deposit made by the assessee against the tenders applied for and which had become irrecoverable and thus written off, in the absence of any evidence to substantiate the same. The Ld.Counsel for the assessee contended that considering the fact that a major fire had destroyed all documents available with the assessee it was factually impossible for the assessee to substantiate its explanation with evidence. The Ld.Counsel for the assessee contended that the assessee is in the process of obtaining whatever possible evidence it can possibly now i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been allowed depreciation even in scrutiny assessment in the preceding assessment years i.e. assessment years 2009-10 and 2010-11. Copy of the assessment orders passed u/s 143(3) for the said year was placed before us at page Nos.46 to 56. The Ld.Counsel for the assessee contended that the AO, on the other hand, had rejected the claim of the assessee that its R D expenditure were capital in nature and had treated the same to be a revenue in nature and accordingly allowed the claim of entire R D expenses incurred in the year but had disallowed the assessee s claim of depreciation on the written down value of the technical know-how as at the beginning of both the years. The Ld.Counsel for the assessee pointed out that the only reason for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... more opportunity to the assessee to procure all possible evidences to substantiate its aforestated claim of prior period expenses and foreign exchange fluctuation in assessment year 2011-12 and write off of earnest money deposit in assessment year 2012-13. We, therefore, restore the issue back to the AO to consider the issue afresh after giving due opportunity of hearing to the assessee. Ground of appeal No.1(a) (b) in ITA No.653/Chd/2017 and ground of appeal No.1(a) in ITA No.654/Chd/2017 are, therefore, allowed for statistical purposes. 8. As for ground of appeal No.1(c) in ITA No.653/Chd/2017 and ground of appeal No.1(b) in ITA No.654/Chd/2017 relating to disallowance of depreciation on technical know-how we are unable to fathom wh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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