TMI Blog2022 (2) TMI 1277X X X X Extracts X X X X X X X X Extracts X X X X ..... djudicated in favour of the assessee in assessment year 2006-07, the issue stands covered by the said order of the ITAT. Accordingly, the claim of the assessee to small and low value item written off is allowed. Disallowance of Miscellaneous losses and write offs - assessee pointed out that it had been submitted to the Ld. CIT(A) that the impugned losses and write off were on account of loss material through pilferage, shortage of material in transit, shortage arising on physical verification, obsolescence of materials, stores, loss in sale of scrap etc. - HELD THAT:- In view of the above since identical disallowance has been deleted by the ITAT in the case of sister concern of the assessee [ 2015 (6) TMI 1096 - ITAT AHMEDABAD] , the decision in the said case would squarely apply in the present case also following which the impugned disallowances of write offs amounting is deleted. - ITA No. 1709/Ahd/2012 - - - Dated:- 28-2-2022 - MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER AND MS. SIDDHARTA NAUTIYAL, JUDICIAL MEMBER For the Assessee : Shri M.K. Patel, Advocate For the Respondent : Shri Karunkant Ojha, CIT/DR ORDER PER : ANNAPURNA GUPTA, ACCOUNTANT MEMBER:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pment in the field of electricity distribution, for certain under developed area and class of consumers. The benefit from the development of the same accrued to the company over a longer period of time and hence, it had written back every year @10% of the year end balance, as per the accounting policy of the company. In respect of the consumers' contribution, the assessee submitted that the company has developed infrastructure of electrical line and cable network systems to provide the electricity at the consumers' doorstep and as per the rules framed by the Gujarat Electricity Regulatory Commission, the company recovered the amount towards the same from new consumers while releasing the connection to such customers. The benefit from the development of the same accrued to the company over a longer period of time and hence it had written back every year @10% of the year end balance. The A.O. accepted the contention of the assessee that capital grants from the Government and Consumers' contribution are capital in nature, but held that the treatment of 10% transferred to P L account every year is not in accordance with the provisions of the I.T. Act, 1961. The A.O. held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the assessee, reduced by that portion of the cost thereof, if any, as has been met96 directly or indirectly by any other person or authority: [Provided that where the actual cost of an asset, being a motor car which is acquired by the assessee after the 31st day of March, 1967, [but before the 1st day of March, 1975,] and is used otherwise than in a business of running it on hire for tourists, exceeds twenty- five thousand rupees, the excess of the actual cost over such amount shall be ignored, and the actual cost thereof shall be taken to be twenty-five thousand rupees.] [Explanation 10.--Where a portion of the cost of an asset acquired by the assessee has been met directly or indirectly by the Central Government or a State Government or any authority established under any law or by any other person, in the form of a subsidy or grant or reimbursement (by whatever name called), then, so much of the cost as is relatable to such subsidy or grant or reimbursement shall not be included in the actual cost of the asset to the assessee : Provided that where such subsidy or grant or reimbursement is of such nature that it cannot be directly relatable to the asset acquired, so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sets of plant machinery. The assessee has claimed depreciation on Plant Machinery as under: 17.3 We further observe that similar type of issue came up before the Tribunal in the case of GETCL (supra) which was adjudicated by the Co-ordinate Bench by observing as follows :- 20. We find that in the instant case, the CIT{A) held that excess depreciation claimed on account of capital grant comes to Rs.18.93 crores being 15% of Rs.176,62,04,718/-, i.e. Rs.26,49,30,708/- minus Rs.17,20,37,655/-, which amounts to Rs.9,28,93,053/-, and 15% of Rs.6427.94 lakhs amounting to Rs.964.191 lakh. The submissions of the assessee before us is that the uniform rate of 15% adopted by the CIT(A) is not justified. As per provisions of section 43(1} of the Act, the capital grant should be reduced from the cost/WDV of the relevant asset, and thereafter the depreciation is to be calculated. Thus, the capital grant receipt in respect of asset, on which depreciation is allowable at the rate different from 15% should be worked out as per the applicable rate. The DR could not point out any mistake in the above submission of the assessee. which we find is in accordance with law. We, therefore, set asi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the notes pertaining to the significant accounting policies being followed by the assessee, it was mentioned that any depreciable assets, except office equipments and furniture and fixtures, having written down value below Rs. 5,000/- have been fully charged to revenue in the year in which the assets are purchased. The A.O. held that this accounting policy adopted by the assessee was not in accordance with the provisions of the I.T. Act, 1961 and that the principles of accountancy cannot override taxation laws. Therefore, the A.O. disallowed Rs. 1,26,000/- claimed by the assessee towards small and low value items written off and added to the total income of the assessee. 9. The Ld. CIT(A) upheld by the disallowance made by the A.O. Before us ld. Counsel for the assessee pointed out that identical issue was dealt with by the ITAT in the case of the assessee in assessment year 2006-07 allowing the identical claim. Our attention was drawn to para 18 to 22 of the order is as under: 8. Ground no.3 -reads as under :- 3.0 The learned Commissioner of Income Tax (Appeals) has erred in law and facts in confirming the disallowance of Rs.1,08,030/- under the head small low value ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... neous losses and write offs amounting to Rs. 47,88,340/-. 12. Brief facts relating to the issue are that the A.O. noted that the assessee had claimed losses on account of loss of materials through pilferage, shortage of material in transit, shortage arising on physical verification, obsolescence of materials / stores, loss in sale of scrap etc., aggregating to Rs 47,88,340/- under the head 'Miscellaneous losses and write-offs'. Since the assessee failed to furnish any documentary evidence in respect of these claims, the A.O. disallowed the claim of Rs. 47,88,340/- and added to the total income of the assessee. The Ld. CIT(A) upheld the order of the A.O. 13. Before us, Ld. Counsel for the assesse pointed out that it had been submitted to the Ld. CIT(A) that the impugned losses and write off were on account of loss material through pilferage. shortage of material in transit, shortage arising on physical verification, obsolescence of materials, stores, loss in sale of scrap etc.. Our attention was drawn to the submission made in this regard before the Ld. CIT(A) placed before us at paper book at page no. 5 is as under: 1.1 In this context, it is submitted that during ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Amount Rs. In Lakhs 79510 SHORTAGES ON PHYSICAL VER.OF MAT STOCKS GODHRA O M DIV 7.98 79510 SHORTAGES ON PHYSICAL VER.OF MAT STOCKS HALOL O M DIV 0.02 79511 LOSS OF MATERIALS BY PILFERAGE ETC. GODHRA O M DIV 9.59 79511 LOSS OF MATERIALS BY PILFERAGE ETC.. HALOL O M DIV 25.76 79511 LOSS OF MATERIALS BY PILFERAGE ETC. LUNAWADA O M DIV 0.99 79520 LOSS OF CASH WRITTEN OFF DAHODO MDIV 0.65 79530 COMPENSATION FR INJURIES, DEATHS-STAFF DABHOI O M DIV 0.49 79530 COMPENSATION FR INJURIES,DEATHS-STAFF ANAND O M DIV 2.21 79530 COMPENSATION FR INJURIES,DEATHS-STAFF GODHRA O M DIV 0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e proceeding, the Learned AR relied upon the judgment passed by the Co-ordinate Bench in ITA No.761/Ahd/2012 in assessee s own case for A.Y. 2008-09 whereby and whereunder the identical issue has been decided in favour of the assessee. A copy whereof has also been submitted before us. The Learned DR, however, failed to raise any serious objection to such contentions made by the Learned AR. 6. Heard the respective parties, perused the relevant materials available on record and also the judgment passed by the Co-ordinate Bench in ITA No.761/Ahd/2012 for A.Y. 2008-09. The relevant portion of dealing with the identical issue is as follows: 37. The ground no.2 of the Revenue is directed against the order of the CIT(A) in deleting the addition of Rs.1,41,15,000/- made on account of disallowance of loss of material through pilferage, shortage of material-intransit, shortage arising on physical verification etc. 38. Brief facts of the case are that the AO observed that the assessee has claimed Rs.1,41,15,000/- on account of miscellaneous loss and write offs. In reply to the show cause notice, the assessee submitted that these losses are on account of loss of materials, through pi ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
