TMI Blog2021 (4) TMI 543X X X X Extracts X X X X X X X X Extracts X X X X ..... he ld. Counsel for the assessee as well ld. CIT-DR agreed that the matter need to go back to the file of the AO for fresh adjudication, as verifications are required to be made by AO as to the claim of depreciation made by the assessee in preceding years and impact of this reversal of depreciation of earlier years on tax liability of the assessee under the provisions of the 1961 Act for the impugned ay. Thus, keeping in view the entire factual matrix of the case and after hearing both the parties, we are of the considered view that this issue needs to go back to the file of the AO for fresh adjudication on merit in accordance with law. The assessee is directed to produce relevant evidences that it is claiming correct depreciation and written down value of assets for earlier years under the provisions of the 1961 Act while filing return of income with Revenue , and no prejudice is caused to Revenue by this reversal of depreciation and to demonstrate that this reversal of depreciation is tax neutral. - grounds of appeal filed by assessee allowed for statistical purposes. Valuation of closing stock of finished goods - assessee has not included excise duty payable on closing st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... after, filed Miscellaneous Application bearing number 53/Alld./2016 arising out of ITA No. 117/Alld./2011 for assessment year 2007-08 with tribunal on 05.12.2016 , on the grounds that two mistakes have crept in the aforesaid appellate order dated 28.07.2016 passed by the tribunal, which MA filed by the assessee stood allowed by tribunal vide orders dated 07th January 2021, wherein tribunal held as under: 6. We have considered rival contentions and have perused the material available on record. We have observed that the assessee is a Public Sector Enterprise being a Government of India Undertaking. We have observed that the assessee has raised grounds of appeal with respect to enhancement to income made by ld. CIT(A) with respect to write back of depreciation by the assessee which was enhanced by learned CIT(A) to ₹ 292.92 lacs, as against addition to the income of ₹ 43.95 lacs originally made by the AO while framing assessment against the assessee.. The AO had made additions to income of the assessee to the tune of 15% of the total depreciation written back by the assessee by adding ₹ 43.95 lacs to income of the assessee, which was later enhanced by ld. CIT(A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the purpose of computation of depreciation as was being brought forward from the earlier year therefore, it was held by the Tribunal that the AO was not correct in law in disallowing the depreciation amounting to ₹ 43.95 lacs. Thus, the tribunal restricted its finding and conclusions to grant of relief to the tune of ₹ 43.95 lacs as against relief of ₹ 292.92 lacs claimed by the assessee. We have observed that learned CIT(A) has given elaborate finding and reasoning in para 3.10 at page 12 wherein it is stated that the assessee has computed its Brought forwards losses and unabsorbed depreciation in an incorrect manner and further elaborations were made by learned CIT(A) while enhancing the income of the assessee on this issue. The tribunal has not dwelt upon /adjudicated this issue of enhancement of income by learned CIT(A) , which may require detailed arguments. The tribunal has dismissed the said ground of appeal raised by assessee on the grounds as being not pressed. The assessee is prejudiced by said dismissal in limine. Since Tribunal has restricted its finding to 43.95 lacs, it will be in the interest of justice that the Grounds No.5 and 6 which were n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hority of law , and with a view to subserve interest of justice, we are inclined to restore Ground No.7 back to the file of Tribunal for fresh adjudication and to this extent the MA filed by the assessee on this issue is allowed. We order accordingly. 8. The Registry is directed to issue fresh notice to both the parties in regular course notifying date for fresh hearing of the matter as indicated above in ITA no. 117/Alld/2011 for ay: 2007-08, and MA is accordingly partly allowed for statistical purposes by us on this issue, as indicated above. 1.2 That s how the assessee is now before us after its aforesaid MA was allowed by tribunal vide order dated 07th January 2021 , now seeking adjudication of its ground number 5 , 6 and 7 raised by it in memo of appeal filed with the tribunal in ITA No. 117/Alld/2011 for ay: 2007-08 , which stood restored back to the file of the tribunal for fresh adjudication by tribunal , vide tribunal order dated 07th January 2021 in MA No. 53/Alld/2016. The Ground No. 5,6 and 7 raised by assessee in memo of its appeal in ITA No. 117/Alld/2011 for ay:2007-08 filed with tribunal, are reproduced as hereunder: 5.Because the learned C.I.T.(A) err ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see has also claimed depreciation on the assets which were not in use. The AO in the first round of litigation has made addition to the income of the assessee to the tune of 15% of the depreciation of ₹ 292.92 lacs, which led to the additions to the income of the assessee to the tune of ₹ 43.95 lacs, which stood enhanced to the additions to the income of the assessee to the tune of entire depreciation write back of ₹ 292.92 lacs by ld. CIT(A). The tribunal in first round of litigation gave relief to the assessee to the tune of ₹ 43.95 lacs and the assessee being aggrieved filed MA. The tribunal allowed the MA by restoring the issue back to its file for fresh adjudication of ground number 5 6. During the course of hearing before tribunal which was conducted pursuant to its order in MA through videoconferencing through virtual court, the counsel of the assessee and ld. CIT-DR have put in their arguments before the Bench to support their contentions. Both the ld. Counsel for the assessee as well ld. CIT-DR agreed that the matter need to go back to the file of the AO for fresh adjudication, as verifications are required to be made by AO as to the claim of depr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for fresh adjudication. Both the ld. Counsel for the assessee as well ld. CIT-DR made their submissions to support their contentions. The dispute is in very narrow compass. The assessee has not included excise duty component while valuing closing inventory of finished goods as at year end which it is required to do so keeping in view provisions of Section 145A(ii) as claim is made by assessee that the same are lying in its warehouse situated in factory premises and the same were not removed from the factory/warehouse by the end of the year. The claim of the assessee is that the excise duty although is leviable on manufacturing of goods but is payable when the goods are removed from factory. We have observed that the auditors have given qualifying adverse remark on the valuation of finished goods as at year end in the audited balance sheet for the year 2006-07(placed in file), without including excise duty to the tune of ₹ 64.73 lacs. The qualifying note read as under: 2(v)(e) No provision has been made for the unpaid amount of excise duty of ₹ 64.73 lacs towards the stock of finished goods lying at the Warehouse of the Company. This has resulted in understatement o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the finished goods are lying in the bonded warehouse within factory premises and the finished goods are allowed to be shifted by excise department to bonded warehouse without firstly paying excise duty , then obviously the liability for excise duty incidence has not occurred and the same cannot be included for the purposes of Section 145A(ii). Thus, we are restoring this issue back to the file of the AO for fresh determination of the issue in accordance with ratio of decision of Hon ble Supreme Court in the case of Polyset(supra) and other decisions cited by us in this order, and after making necessary verifications as are referred to in above. Needless to say that the AO shall provide proper and adequate opportunity of being heard to the assessee in accordance with principles of natural justice in accordance with law , in set aside proceedings. The evidences filed by assessee in its defense in set aside proceedings shall be admitted by AO and adjudicated on merits in accordance with law. Thus,in nutshell, the grounds of appeal number 7 filed by assessee in memo of appeal filed with tribunal are allowed for statistical purposes. We order accordingly. 4. In the result, the ground ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
