TMI Blog2022 (2) TMI 42X X X X Extracts X X X X X X X X Extracts X X X X ..... eassessment proceedings in to a regular assessment proceeding and agitate issues which were concluded in the original assessment proceedings. The Income tax liability cannot be reduced to a figure less than that determined in the original assessment. The claim of the assessee for the custom duty is not applicable in the given facts and circumstances for the reason that the present proceedings before us are under Section 147 of the Act which cannot extend any benefit to the assessee. Accordingly, before going into the intricacies whether the assessee is eligible for the custom duty paid by it as deduction or not is not within the provisions of law. Once, a claim is not admissible, we refrain ourselves from adjudicating the issue raised by the assessee on the admissibility of custom duty paid by it. Hence, the ground of appeal of the assessee is dismissed. Netting of interest by AO while computing deduction u/s 80IA - HELD THAT:- As in original assessment proceeding under section 143(3) of the Act claim of the assessee for deduction on other income under section 80IA was disallowed by the AO. The mater reached to this tribunal [ 2004 (12) TMI 289 - ITAT AHMEDABAD-B] as confi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nnot be denied the depreciation allowance on the amount of interest capitalised on the machines. Consequently, set aside the finding of the learned CIT-A, and direct the AO delete the addition made by him. Hence the ground of appeal of the assessee is allowed. Addition of prior period expenses - AO observed that the assessee should have claimed such expenses in the year to which it pertains as per the mercantile system of accounting - HELD THAT:- The genuineness of the expenses have nowhere been doubted by the authorities below. Thus it is transpired that the expenses claimed by the assessee were incurred for the purpose of the business in the earlier year and the same were eligible for deduction in that particular assessment year in which such expenses were incurred. Now the question arises the expenses genuinely incurred by the assessee in the earlier year could be disallowed in the year under consideration when such expenses were claimed. The answer stands in affirmative. It is for the reason that the expenses there is no loss to the revenue as there is no change in the rate of tax. See NAGRI MILLS CO. LTD. [ 1957 (9) TMI 30 - BOMBAY HIGH COURT ] - e find difficult to conv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e from the Judgment of Hon ble Delhi High Court in the case of Oawal Agro Mills Ltd. [ 2010 (12) TMI 947 - DELHI HIGH COURT] The assets deployed in the unit No. 1, though not in operation during the year, but assets were previously used and ready to use for the purpose of the business. Thus, it can be said that there was passive use of these assets. Assets used unit No. 1 became the part of the block of assets and lost their individual identity. Accordingly, the assets deployed in unit No. 1 cannot be segregated for the purpose of the depreciation. These assets will remain part of the block of assets and therefore would be entitle for depreciation even in a situation that assets were not used for a particular year for the purpose of the business. Accordingly, we set aside the finding of the Ld. CIT-A, and direct the AO to delete the disallowance made by him. Hence, the ground of appeal of the assessee is allowed. Addition of closing value of raw materials, spares, WIP and finished goods written off on account of obsolescence - AO disregarded the contention of the assessee by observing that there was no report furnished by the assessee of an expert suggesting that the im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of 5 days under the relevant Act for making the payment of employee s contribution towards the PF/ESI. Therefore the assessee is liable to deposit the employee s contribution on or before 20th day of the month from the close of the month in which the salary was due for payment. Therefore in our considered view grace period of 5 days should also be allowed to the assessee as provided under the respective Act. See AMOLI ORGANICS (P) LTD. [ 2013 (11) TMI 971 - GUJARAT HIGH COURT] - thus we direct the AO to delete the addition to the extent of amount of PF/ESI deposited within grace period. Hence the ground of appeal of the Assessee is allowed in part. Depreciation for an amount on the written down value of the fixed assets - HELD THAT:- At the outset we note that impugned dispute for the depreciation on the written down value was emanating from the assessment year 2002-03 and onwards. Admittedly, the ITAT for the assessment year 2002-03 to 2005-06 was pleased to allow depreciation on the addition of the fixed assets which were in dispute.Once the ITAT has allowed the depreciation on the addition of the fixed assets in the initial assessment year, the question of making the disa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng with bills of entries that were set aside for verification. Ld. CIT (A) ought to have adjudicated and deleted disallowance of custom duty paid. It be so held now. 2 Ld. CIT (A) erred in law and on facts in confirming rejection of claim of netting of interest by AO while computing deduction u/s 80IA of the Act. Both the lower authorities failed to appreciate detailed submissions made by appellant establishing nexus between interest income and expenditure to justify the claim that only net 'interest income' to be taken out from the calculation of profits of the business for computing deduction u/s 80IA of the Act as per the ratio of the latest judgment of the Hon'ble Apex Court. Ld. CIT (A) ought to have granted netting off interest computed by the appellant while granting deduction u/s 80IA of the Act. It be so held now. The appellant craves leave to add, amend, alter, edit, delete, modify or change all or any of the grounds of appeal at the time of or before the hearing of the appeal. 3. The first issue raised by the assessee is that the Ld. CIT-A erred in not allowing the deduction of ₹ 82,54,455/- representing the custom duty on payment b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee against the order of the AO preferred an appeal to the Ld. CIT-A who denied the benefit to the assessee in his order dated 4th December 2013 by observing that there was no such direction arising from the order of the ITAT dated 21st October 2011 for allowing the benefit of the deduction of the custom duty paid by the assessee during the relevant year. 10. Being aggrieved by the order of the Ld. CIT-A, the assessee is in appeal before us. 11. The Ld. AR before us filed a Paper Book running from pages 1 to 113 and filed the chronological events as detailed under: Sr. No. Date Particulars 1 28-11-00 Return of income filed 2 31-03-03 Assessment order u/s. 143(3) of I.T. Act 3 05-03-04 Order passed by Hon ble CIT(A) 4 03-12-04 Order passed by Hon ble ITAT 5 29-12-04 Assessment orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iled to provide the benefit in effect giving order. Accordingly, the learned AR before us prayed to allow the claim of the assessee subject to the verification about the fact of the payment made by the assessee for the custom duty in the year under consideration. 16. On the contrary, the Ld. DR vehemently supported the order of the authorities below. 17. We have heard the rival contentions of both the parties and perused the materials available on record. Admittedly, originally the proceedings initiated against the assessee under the provisions of Section 143(2) of the Act which raised up to the ITAT. The assessee for the first time before ITAT claimed the deduction on account of custom duty for ₹ 82,54,455/- by making additional claim. The ITAT in ITA No. 1481/Ahd/2004 vide order dated 3rd of December 2004 was pleased to admit the claim and allow the deduction to the assessee subject to the verification. The relevant finding of the order of the ITAT reads as under: in the additional ground raised the assessee wants relief on account of applicability of section 43B. In the facts and circumstances of the case, we are of the considered opinion that in view of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 5th January 2007 has reached to the finality. However, the assessee carried the matter before the ITAT for some other items of dispute in ITA No. 1039/Ahd/2007 except the amount of custom duty as discussed above. For other disputes, the ITAT has passed the order dated 21st October 2011. 22. Accordingly, the AO passed order giving effect dated 31st December 2012 without giving the benefit of the custom duty as claimed by the assessee. On appeal the Ld. CIT-A has also denied the benefit of the claim of the assessee in his order dated 4th December 2013. 23. Before the adjudicating the issue raised by the assessee before us whether the claim of the assessee for the deduction of the custom duty is admissible in the given facts and circumstances, we take a note of the fact that the assessee has claimed the deduction for the custom duty in the proceedings under Section 143(3) of the Act first time before the ITAT which was admitted and allowed subject to the verification by order dated 3rd December 2004. Thus, the question arises, the claim which have been made by the assessee in the proceedings under Section 143(3) of the Act, can the assessee made a similar claim in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hence, the ground of appeal of the assessee is dismissed. 26. The issue raised by the assessee in the 2nd ground of appeal is that the learned CIT-A erred in not allowing the benefit of netting of interest income while computing the deduction under section 80IA of the Act. 27. The proceedings were initiated against the assessee under the provisions of section 147 of the Act. The assessee in response to the notice issued under section 148 of the Act by the AO filed return of income dated 18-02-2005. The AO found that the assessee while calculating the deduction under section 80IA of the Act has taken certain other income under consideration as detailed below: (i)Interest income ₹ 5,91,30,485/- (ii)Dividend income ₹ 15,726/- (iii)Other income (a)Exchange rate difference ₹ 13,37,569/- (b)Excise credit ₹ 2,61,759/- (c) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xport incentive DEPB of ₹ 74,50,143/- and sundry balance o) ₹ 2,09.507/- for want of detailed. Since Ld. AR has not pressed these items, therefore same are dismissed as not pressed. As regards to interest income, the claim of assesses is only in respect of netting. 14. Alter hearing Ld.DR we sent back this issue regarding of interest Income to the file of AO with direction to verify the nexus and decide the issue after considering latest available decision on this issue. As regards to exchange rate fluctuation excess credit Public issue and excess provisions of written back bonus are related to profit and loss account. In other wards, the income is derived from industrial' undertakings and business income we therefore allow the deduction u/s,80HHC of the Act on these items. AO is directed accordingly. 31. Now the limited issue before the AO was with respect to the netting of interest income shown by the assessee while calculating the deduction under section 80IA of the Act in pursuance to the direction of the ITAT vide order dated 21-10-2011 as discussed above. 31.1 The assessee before the AO in the set-aside proceedings in pursuance to the directi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mitted by appellant company to substantiate the contention for making long term investment with borrowed funds. It is therefore, I am inclined with the contention of A.O. that appellant failed to - establish the nexus between interest income and interest expenditure. Further the appellant failed to substantiate its contention that borrowed funds were utilized for earning such interest. The verification part as discussed above and as directed by Hon'ble ITAT also reflects that there is no nexus between borrowed fund and investment so made. As per the latest available decision of Hon'ble ITAT Ahmedabad in the case of ABM Steels Pvt. Ltd. (supra) as relied on by appellant also, it is only the expenditure which has nexus with the earning of such income only will be reduced from total income for netting purpose. But, in the case of appellant no such nexus is there. The A.O. is fully justified in disallowing interest income of ₹ 5,91,30,485/- from the claim of deduction u/s 80IA of the Act resulting into reduction of claim u/s 80IA of the Act at ₹ 17,68,251/-. This ground is therefore dismissed. 34. Being aggrieved by the order of learned CIT-A, the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome under section 80IA was disallowed by the AO vide order dated 31-03-2003. The mater reached to this tribunal in ITA No. 1481/Ahd/2004 and the coordinate bench vide order dated 03-12-2004 confirmed the stand of the AO that other income should be excluded from the calculation of the deduction under section 80IA of the Act. Thus, the question arises, the claim which have been made by the assessee in the proceedings under Section 143(3) of the Act, whether the assessee can made a similar claim in the income escapement proceedings. 41. We are of the view that reassessment proceedings under Section 147 of the Act are for the benefit of the revenue and not for the assessee as held by the Hon'ble Supreme Court in the case of CIT v. Sun Engg. Works (P.) Ltd. [1992] 198 ITR 297 (SC)/64 Taxman 442. It is not for the taxpayer to convert the reassessment proceedings in to a regular assessment proceeding and agitate issues which were concluded in the original assessment proceedings. The Income tax liability cannot be reduced to a figure less than that determined in the original assessment. The relevant finding of the Hon ble Supreme Court reads as under: whether the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eal: 1 Ld. CIT (A) erred in law and on facts in confirming disallowance by AO of ₹ 82,20, 059/- depreciation claimed on interest capitalized on machine. Ld. CIT (A) failed to appreciate submissions, evidences and documents on record to substantiate claim of depreciation on interest converted into loan amount. Ld. CIT (A) ought to have deleted disallowance. It be so held now. 2 Ld. CIT (A) erred in law and on facts in confirming disallowance by AO of ₹ 3,59, 653/- claimed as prior period expenses. Ld. CIT (A) ought to have deleted disallowance made by AO. It be so held now. 3 Ld. CIT (A) erred in law and on facts in confirming addition made by AO of Rs. 80,000/- payment outstanding u/s 41(1) of the Act. Ld. CIT (A) ought to have deleted addition appreciating submissions that section 41(1) has no application to non payment of disputed amount. It be so held now. 4 Ld. CIT (A) erred in law and on facts in confirming disallowance made by AO of ₹ 1,14,999/- depreciation claimed with respect to closed unit. Ld. CIT (A) ought to have deleted disallowance of depreciation claimed of unit forming part of block of assets not permanently closed. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as added to the cost of the machinery. The assessee has not made the payment of the interest amount to the ICICI bank. As such the amount of loan borrowed by the assessee from the ICICI bank was taken over by Assets Reconstruction Company of India Ltd (ARCIL) along with the interest thereon. In other words the amount of loan and interest due on the assessee to the ICICI bank was closed and new account from ARCII was taken by the assessee. 48. The AO during the assessment proceedings found that there was no payment of the interest to the ICICI bank by the assessee. The amount of interest was converted into the principal amount of loan from ARCIL. Accordingly, the AO was of the view that the impugned amount of interest expenses cannot be capitalized on the machines and therefore on such amount being interest of ₹ 1,09,60,784/- cannot be subject to depreciation. Accordingly, the AO computed the amount of depreciation attributable to such amount of interest at ₹ 8,22,059/- and disallowed the same. 49. Aggrieved assessee preferred an appeal to the Ld. CIT-A, who confirmed the order of the AO by observing as under: 5.2 I have carefully considered the submissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its bank account and thereafter could have made the payment of the loan along with the interest of ICICI bank. This transaction under option one would have been routed through the banking channel of the assessee. Likewise, the assessee under the second option instead of borrowing the money from ARCIL for the payment of the loan along with the interest to the ICICI Bank, has made the arrangement that ARCIL will directly make the payment to the ICICI Bank along with the interest. Accordingly, the assessee would make accounting adjustment in its books of accounts. Under the second option, there will not be any transaction in the bank account of the assessee for receiving the loan from ARCIL for the repayment of the loan along with interest to the ICICI Bank except making the accounting adjustment in the books of accounts. It appears that the assessee in the given facts has adopted second option. However, in either of the case, there is no dispute to the fact that the payment was made by the assessee towards interest after converting the same as fresh loan from ARCIL. In other words, the payment of interest to the ICICI Bank by way of acquiring the fresh loan is a valid mode of paymen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A O of ₹ 3,59,653 is confirmed and the ground of appeal No. 4 raised is dismissed. 59. Being aggrieved by the order of the Ld. CIT-A, the assessee is in appeal before us. 60. The Ld. AR before us contended that the genuineness of the expenses pertaining to the earlier year but claimed in the year under consideration was not doubted. As per the learned AR, such claim of the assessee is eligible for deduction. 61. On the contrary, the Ld. DR vehemently supported the order of the authorities below. 62. We have heard the rival contentions of both the parties and perused the materials available on record. The genuineness of the expenses have nowhere been doubted by the authorities below. Thus it is transpired that the expenses claimed by the assessee were incurred for the purpose of the business in the earlier year and the same were eligible for deduction in that particular assessment year in which such expenses were incurred. Now the question arises the expenses genuinely incurred by the assessee in the earlier year could be disallowed in the year under consideration when such expenses were claimed. The answer stands in affirmative. It is for the reason that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act. Hence, the AO concluded that the liability has ceased to exist under the provisions of Section 41(1) of the Act and added the same to the total income of the assessee. 66. The aggrieved assessee preferred an appeal to the Ld. CIT-A. 67. The assessee before Ld. CIT-A submitted that outstanding amount relates to purchase of motor car. Therefore, the provision of Section 41(1) will not apply as the same is capital in nature. Further, the provision of Section 41(1) are not applicable to the amount in dispute even the same is revenue in nature. 68. However, the Ld. CIT-A confirmed the order of the AO by observing as under:- 10.2 I have carefully considered the submissions made by the appellant and the argument taken by the assessing officer in the light of material available on records. It is the case of the appellant, as evident from an additional submission filed, that it had explained to the AO that the said amount of credit to the party was on account of sale of old scrap and the same being capital asset beyond the purview of section 41(1). In another submission dt 15-11-2013, the appellant has reiterated the stand taken before A O that the impugned amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deduction against the business income by way of depreciation in the books of accounts. 74. Now, we proceed to see whether the loan liability outstanding since many years against the capital asset being car can be covered under the provisions of Section 41(1) of the Act. For this purpose, refer the provisions of Section 41(1) of the Act which reads as under: 41. (1) Where an allowance or deduction has been made in the assessment for any year in respect of loss, expenditure or trading liability incurred by the assessee (hereinafter referred to as the first-mentioned person) and subsequently during any previous year,- (a) the first-mentioned person has obtained, whether in cash or in any other manner whatsoever, any amount in respect of such loss or expenditure or some benefit in respect of such trading liability by way of remission or cessation thereof, the amount obtained by such person or the value of benefit accruing to him shall be deemed to be profits and gains of business or profession and accordingly chargeable to incometax as the income of that previous year, whether the business or profession in respect of which the allowance or deduction has been made is in exis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the total income as balancing charge only under section 41(2). That concept was foreign to the scheme of section 41(1). The balancing charge under section 41(2) arose only where any depreciable asset (building, machinery, plant or furniture) was sold. 76. Once a transaction, representing loan against the capital assets, is not a trading liability as envisaged under the provisions of Section 41(1) of the Act. The same cannot be charged to tax on the reasoning that it has ceased to exist in the books of accounts. Accordingly we are not convinced with the finding of the authorities below. Thus, we set aside the finding of the Ld. CIT-A, and direct the AO to delete the addition made by him. Hence the ground of appeal of the assessee is allowed. 77. The issue raised by the assessee in ground No. 4 is that the Ld. CIT-A erred in confirming the disallowance of depreciation made by the AO for ₹ 1,14,999/- in respect of unit 1 on the reasoning that it was not in operation. 78. The assessee in the year under consideration has claimed the depreciation with respect to unit No. 1 amounting to ₹ 1,14,999/-. The unit 1 was not in operation. The assessee contended tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 85. We have heard the rival contentions of both the parties and perused the materials available on record. In the present case, the claim of the assessee for the depreciation was denied by the authorities below on the reasoning that the assets with respect to Unit-1 were not used for the purpose of the business as Unit-1 was closed. On perusal of the provisions of Section 32 of the Act, it is one of the precondition for claiming the depreciation on a particular asset that it should be used for the purpose of the business. However, the Hon ble courts have interpreted the word used by holding that assets which are ready to use shall be considered as used for the purpose of the business. In other words, the assets which are not actively used but used passively are also eligible for depreciation under the provisions of section 32 of the Act. In holding so we draw support and guidance from the Judgment of Hon ble Delhi High Court in the case of Oawal Agro Mills Ltd. reported in 341 ITR 467, wherein it was held as under: By catena of judgments, it stands settled that the assessee should have used the asset for the whole of assessment year in question to claim full depreci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tems. Thus the AO disallowed the same and added to the total income of the assessee. 91. Aggrieved assessee preferred an appeal to the Ld. CIT-A. 92. The assessee before Ld. CIT-A submitted that it has been in the business of manufacturing Lama Tubes, printed Stickers and logo etc. for last 13 years. In these period non-moving stocks including material rejected by customer piled-up. The stock rejected by the customers have no value as such material contain the detail of particular customer and produced as per specification of that customer. In view of cleaning up the books the management deployed a qualified chartered account and on the basis of report prepared by the accountant it reduces the stock. The assessee in support also submitted the copy of the CA report. 93. However, the Ld. CIT-A rejected the submission of the assessee and confirmed the action the AO by observing as under: 13.3 I have carefully considered the submissions made by the appellant and the argument taken by the assessing officer in the light of material available on records. It is an undisputed and admitted fact of the case that the valuation of the stock was done by none other than comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt case the Assessee has reduced value of the closing stock as on 31st March 2006 with respect to raw materials, WIP finished goods by ₹ 1,53,28,000/-. As per the assessee is engaged in the manufacturing activity for past several years and in the process several item of Raw material WIPs and finished including goods return from customer were pilled which were non salable/non-moving. Thus the new management in order to clean up the inventory and financial statement appointed internal auditor/ stock auditor to identify non-moving items and as per report furnished by the chartered accountant the management of the assessee company has in consultation with departmental head such production and stores decided to value of these items at the realisable value or nil value as the case may be. However, the AO, disagreed with the claim of the assessee on the reasoning that there was no proof furnished whether the impugned items were representing non saleable/non-moving. Likewise, the internal auditor/stock auditor is not an expert to value such stocks. The view taken by the AO was subsequently confirmed by the Ld. CIT-A on the reasoning that the assessee has failed to prove on the basis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Such practice cannot be doubted by the authorities below without any material on record. In the given case, there was the report of the internal auditor/stock auditor specifying the nonmoving/ unsaleable items. This report of the auditor was also certified by the production head/store head etcetera. This fact can be ascertain from the submissions made by the assessee before the learned CIT-A which is reproduced as under: (c) (i) It is not merely relying on auditors report but auditors had discussed in details regarding age factor, quality, shelf life, vatability factors of each item and the value taken is also certified by the HoDs of different departments like production, stores etc. The proof of expert opinions in the form of departmental heads is in the form of their certification by signing the said non-moving stock statements along with certification by auditors which runs in to hundred of pages 350 pages. (ii) The stock statement certified by Auditors and production heads being an expert product properties and qualities have been taken into consideration for the items like Aluminium Foil papers for printing labels. BOPP Film, self adhesive film, plastic cups, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce of claim of ₹ 5.18 lakhs from stock of packing material and ₹ 27.17 lakhs from stock of finished goods. [Para 5.1] 103. In view of the above, and considering the fact in totality we hold that the assessee cannot be denied the deduction in the value of closing stock on account of non-moving/unsaleable items. Thus we set aside the order of the Ld. CIT-A, and direct the AO to delete the addition made by him. Hence, the ground of appeal of the assessee is allowed. 104. The issue raised by the assessee in ground No. 7 is that Ld. CIT-A erred in confirming the addition made by the AO for ₹ 44,573/- on account of nonITA payment of employees contribution towards the Employees Provident fund and ESI which was paid within the grace period. 105. The AO during the assessment proceedings found that the assessee has failed to make the payment of the amount recovered from the employees towards the EPF and ESI within the time provided under the respective Act. Thus, the AO treated the same as income of the assessee under the provisions of Section 2(24)(x) r.w.s. 36(1)(va) of the Act for ₹ 44,573/- and added to the total income of the assessee. 106. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n.com 149 where it was held as under: Under particular Act or law, in the present case under the Provident Fund Act, if the assessee was entitled to make payment within the grace period and if within that grace period, its employer contributions have been deposited by the assessee, it cannot be said that the assessee has not deposited the amount with the department within the due date as prescribed under the Provident Fund Act. Under such circumstances, as such no error and/or illegality has been committed by the Tribunal in granting deduction to the assessee with respect to the amount deposited with the provident fund department within the extended period/grace period. Under the circumstances, no other issues are required to be considered. No question of law muchless any substantial question of law arises in the present appeal. [Para 8] 110. In view of the above we set-aside the finding of the Ld. CIT (A), and direct the AO to delete the addition to the extent of amount of PF/ESI deposited within grace period. Hence the ground of appeal of the Assessee is allowed in part. 111. The issue raised by the assessee in the additional ground of appeal is that the Ld. CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ld. AR before us submitted that the ITAT in the own case of the assessee for the Assessment Year 2002-03 to 2005-06 was pleased to allow the depreciation on the additions made in the fixed assets along with the software in the Assessment Year 2002-03. Accordingly, the Ld. AR contended that the depreciation in the year under consideration should also be allowed on the opening written down value. 116. On the other hand, the Ld. AR vehemently supported the order of the authorities below. 117. We have heard the rival contentions of both the parties and perused the materials available on record. At the outset we note that impugned dispute for the depreciation on the written down value was emanating from the assessment year 2002-03 and onwards. Admittedly, the ITAT for the assessment year 2002-03 to 2005-06 was pleased to allow depreciation on the addition of the fixed assets which were in dispute. The relevant finding of the ITAT in ITA No. 1140,1342 to 1344/Ahd/2015 reads as under: 8. We have gone through the relevant record and impugned order. Now question before us is that whether on the basis of survey conducted by the Income Tax Department claim of the assessee fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evidence in support of the contention of the ld. A.O.. In our considered opinion, assessee has complied with all the direction given by the ITAT and submitted all the proof/documentary evidence as per the direction of the Co-ordinate Bench and since it is a second chance before the ITAT and we cannot make more miserable condition of the assessee in the hands of the revenue. 11. In the result, all four appeals with regard to depreciation of the assessee are allowed. 118. Once the ITAT has allowed the depreciation on the addition of the fixed assets in the initial assessment year, the question of making the disallowance of the depreciation on the same set of assets the subsequent year does not arise. Hence we set aside the finding of the Ld. CIT-A, and direct the AO to delete the addition made by him. Hence, the ground of appeal of the assessee is allowed. 119. In the result, appeal of the assessee is partly allowed. Coming to ITA No. 1306/Ahd/2014 an appeal by the assessee for A.Y. 2008-09 120. The assessee has raised following grounds of appeal: 1 Ld. CIT (A) erred in law and on facts in confirming disallowance made by AO of deprecia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the year under consideration i.e. AY 2008-09. Hence, the grounds of appeal filed by the assessee is allowed. 123. The issue raised by the assessee in ground no. 3 is that the Ld. CIT-A erred in confirming the addition made by the AO for ₹ 5,90,392/- representing the prior period expenses. 124. At the outset we note that the issues raised by the assessee in its ground of appeal for the AY 2008-09 is identical to the issues raised by the assessee vide groundno-2 in ITA No. 218/AHD/2014 for the assessment year 2007-08. Therefore, the findings given in ITA No. 218/AHD/2014 shall also be applicable for the year under consideration i.e. AY 2008-09. The appeal of the assessee for the assessment 2007-08 has been decided by us vide paragraph No. 62 to 63 of this order in favour of the assessee. The Ld. AR and the DR also agreed that whatever will be the findings for the Assessment Year 2007-08 shall also be applied for the year under consideration i.e. AY 2008-09. Hence, the grounds of appeal filed by the assessee is allowed. 125. The issue raised by the assessee in ground No. 4 is that the Ld. CIT-A erred in confirming the disallowance of depreciation made by the AO fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A) ought to have directed AO to evaluate claim of depreciation. 5 Ld. CIT (A) erred in law and on facts in confirming action, of AO in disallowing Prior Period Expenses of ₹ 18,27,854/- ignoring fact that same is crystalized during the year under consideration. Ld. CIT (A) ought to have allowed claim of prior period expenses after considering submission of the appellant. It be so held now. 6 Ld. CIT (A) erred in law and on facts in confirming action of AO in disallowing provision of doubtful debt of ₹ 15,40,000/- ignoring submission that amount actually written off in profit loss account buy appellant however under wrong nomenclature. Ld. CIT(A) ought to have considered that wrong nomenclature does not affect right of the appellant to claim legally allowable expenses. It be so held now. 7 Ld. CIT (A) erred in law and on facts in confirming action of AO in disallowing depreciation of ₹ 86,673/- of Kadi Unit ignoring facts that plant and machinery are in working condition only due to temporary lull period same is not used for the purpose of business. Ld. CIT (A) ought to have allowed depreciation on the basis of submission of the appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rred in confirming the addition of ₹ 15,40,000/- on account of disallowances of provision for bad and doubtful debts. 135. The assessee during the year made provision for bad and doubtful debt for an amount of ₹ 15.4 Lacs. The AO required the assessee to establish that the same were credited in the profit loss account on earlier occasion. In response assessee vide letter dated 1st August 2011 submitted that bad and doubtful debt were not credited in P L account. Thus, the AO in view of submission of the assessee disallowed the same and added to the total income of the assessee. 136. Aggrieved assessee preferred to appeal before Ld. CIT-A. Who confirmed the order of the AO by observing as under: 4. Ground number 4 relate to disallowance of provision of doubtful debt at ₹ 1540000. The appellant submitted that nomenclature is wrong and actually this is bad debt only. The appellant also relied upon Supreme Court decision in the case of TRF Ltd vs. CIT 323 ITR 397(SC). 4.2. The submissions are considered. The assessing officer was clearly noted that the assessee was asked to furnish the evidences showing that bad and doubtful debts were earl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee in ground No. 7 is that the Ld. CIT-A erred in confirming the disallowance of depreciation made by the AO for ₹ 86,673/- in respect of Kadi unit on the reasoning that it was not in operation. 143. At the outset we note that the issues raised by the assessee in its ground of appeal for the AY 2009-10 is identical to the issues raised by the assessee vide groundno-4 in ITA No. 218/AHD/2014 for the assessment year 2007-08. Therefore, the findings given in ITA No. 218/AHD/2014 shall also be applicable for the year under consideration i.e. AY 2009-10. The appeal of the assessee for the assessment 2007-08 has been decided by us vide paragraph Nos. 85 to 87 of this order in favour of the assessee. The Ld. AR and the DR also agreed that whatever will be the findings for the Assessment Year 2007-08 shall also be applied for the year under consideration i.e. AY 2009-10. Hence, the grounds of appeal filed by the assessee is allowed. 144. The issue raised by the assessee in ground no. 8 and 9 are either incidental or premature to decide. Hence, the same is dismissed being infructuous. 145. In the result, appeal of the assessee is partly allowed. 146. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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