TMI Blog2023 (12) TMI 417X X X X Extracts X X X X X X X X Extracts X X X X ..... dent that determination of tariff between the assessee and the State Electricity Board cannot be said to be an exercise between a buyer and a seller in a competitive environment or in the ordinary course of trade and business i.e., in the open market. Such a price cannot be said to be the price which is determined in the normal course of trade and competition. Thus, market value of the power supplied by the assessee to its industrial units should be computed by considering the rate at which the State Electricity Board supplied power to the consumers in the open market and not comparing it with the rate of power when sold to a supplier i.e., sold by the assessee to the State Electricity Board as this was not the rate at which an industrial consumer could have purchased power in the open market. It is clear that the rate at which power was supplied to a supplier could not be the market rate of electricity purchased by a consumer in the open market. On the contrary, the rate at which the State Electricity Board supplied power to the industrial consumers has to be taken as the market value for computing deduction under Section 80 IA of the Act. We hold that the Tribunal had ri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection (1) of Section 139 of the Act. In the instant case, there is no dispute that the assessee had claimed depreciation in accordance with sub-rule (1) read with Appendix-I before the due date of furnishing the return of income. The view taken by the assessing officer as affirmed by the first appellate authority that the assessee should opt for one of the two methods is not a statutory requirement. Therefore, the revenue was not justified in reducing the claim of depreciation of the assessee on the ground that the assessee had not specifically opted for the WDV method. We are in agreement with the view expressed by the Tribunal and the High Court that there is no requirement under the second proviso to sub-rule (1A) of Rule 5 of the Rules that any particular mode of computing the claim of depreciation has to be opted for before the due date of filing of the return. All that is required is that the assessee has to opt before filing of the return or at the time of filing the return that it seeks to avail the depreciation provided in Section 32 (1) under subrule (1) of Rule 5 read with Appendix-I instead of the depreciation specified in Appendix-1A in terms of sub-rule (1A) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Accordingly, this issue is answered in favour of the assessee and against the revenue. Nature of receipts - carbon credit - capital or revenue receipt - HELD THAT:- As the issue relating to carbon credit was not raised or urged by the revenue. If that be the position, revenue would be estopped from raising the said issue before this Court at the stage of final hearing. That apart, there is no decision of the High Court on this issue against which the revenue can be said to be aggrieved and which can be assailed. In the circumstances, we decline to answer this question raised by the revenue and leave the question open to be decided in an appropriate proceeding. - WITH CIVIL APPEAL NO.13773 OF 2015 CIVIL APPEAL NO.5524 OF 2017 CIVIL APPEAL NO.7425 OF 2019 CIVIL APPEAL NO. OF 2023 (ARISING FROM SLP (CIVIL) NO.15564 OF 2020) CIVIL APPEAL NO.13775 OF 2015 CIVIL APPEAL NO.13774 OF 2015 CIVIL APPEAL NO.9920 OF 2016 CIVIL APPEAL NO.6986 OF 2016 CIVIL APPEAL NOS.9781-9782 OF 2017 CIVIL APPEAL NO.9917 OF 2017 CIVIL APPEAL NO.941 OF 2020 CIVIL APPEAL NO. OF 2023 (ARISING OUT OF SLP (CIVIL) NO.5871 OF 2020) CIVIL APPEAL NO. OF 2023 (ARISING OUT OF SLP (CIVIL) NO.792 OF 2021) CIVIL AP ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome Tax Act, 1961 by the assessing officer which was set aside by the Income Tax Appellate Tribunal and upheld by the High Courts by accepting the contention of the assessee. Revenue is aggrieved as it contends that the recomputation of deduction made by the assessing officer was interfered with by the Income Tax Appellate Tribunal and affirmed by the High Courts without appreciating the fact that the profits of eligible business of captive power generation plants of the assessees were inflated by adopting an excessive sale rate per unit for power supply to the assessees own industrial units for captive consumption as opposed to the rate per unit at which power was supplied by the assessees to the power distributing companies i.e. the State Electricity Boards which is contended to be the market rate. 4.1. Additionally, there are three other issues which were argued by learned counsel for the appellant at the time of hearing. The first additional issue is whether the Income Tax Appellate Tribunal could ignore compliance to statutory provision relating to exercise of option to adopt Written Down Value (WDV) method in place of straight line method while computing depreciation on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lectricity supplied by the State Electricity Board was inadequate to meet the requirements of its industrial units, the assessee set up captive power generating units to supply electricity to its industrial units. Surplus power was supplied by the assessee to the State Electricity Board. The assessee which is the respondent in this appeal filed return of income on 29.10.2001 declaring nil income. The total income computed by the assessee at nil was arrived at after claiming various deductions, including under Section 80 IA of the Act. Since there was substantial book profit of the assessee, net book profit being Rs.1,11,43,36,230.00, income tax was levied under Section 115 JB of the Act at the rate of 7.5 per cent along with surcharge and interest. 7.1. The return of income filed by the assessee was processed by the assessing officer under Section 143 (1) of the Act. After such processing, certain refund was made to the assessee. Thereafter, the case was selected for scrutiny following which statutory notices under Section 143 (2) and 142 (1) of the Act were issued calling upon the assessee to furnish details for clarification which were complied with by the assessee. During the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claim of deduction under Section 80 IA of the Act which the assessee complied with. 7.3. Response of the assessee was considered by the assessing officer. By the assessment order dated 26.03.2004 passed under Section 143 (3) of the Act, the assessing officer held that Rs.3.72 claimed by the assessee as the rate at which power was supplied by it to its own industrial units was not the true market value. According to the assessing officer, the rate of Rs.2.32 per unit agreed upon between the assessee and the State Electricity Board and at which rate surplus electricity was supplied by the assessee to the State Electricity Board was the market value of electricity. Therefore, for the purpose of computing the profit of the power generating units, the selling rate of power per unit was taken at Rs.2.32. On that basis, assessing officer held that there was an excessive claim of deduction of Rs.1.40 per unit on captive consumption (Rs.3.72 - Rs.2.32), following which the assessing officer worked out the excess deduction claimed by the assessee under Section 80 IA at Rs.31,98,66,505.00. Therefore, the assessing officer restricted the claim of deduction of the assessee under Section 80 I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the agreement dated 15.07.1999 entered into between the assessee and the State Electricity Board. Consequently, Tribunal was of the view that the stand of the revenue could not be approved whereafter it was held that the price recorded by the assessee at Rs.3.72 per unit was the market value for the purpose of Section 80 IA (8) of the Act. Thus, the Tribunal upheld the stand of the assessee and set aside the order of CIT (A) by directing the assessing officer to allow relief to the assessee under Section 80 IA as claimed. 10. Aggrieved by the aforesaid finding rendered by the Tribunal, revenue preferred appeal before the High Court of Punjab and Haryana under Section 260 A of the Act which was registered as Income Tax Appeal No.53 of 2008. The High Court in its order dated 02.09.2008 disposed of the appeal by following its order dated 02.09.2008 passed in the connected ITA No.544 of 2006 (Commissioner of Income Tax, Hisar Vs. M/s Jindal Steel and Power Ltd). That was an appeal by the revenue on the same issue against the order dated 31.3.2006 passed by the Tribunal in the case of the assessee itself i.e. ITA No.3663/Del/2005 for the assessment year 2000-2001. Insofar allowance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... power that was not captively consumed could not be sold in the open market to any third party consumer except with the prior permission of the State Electricity Board, that too, subject to technical feasibility and on the terms and conditions imposed by the State Electricity Board. In view of the restrictions imposed by the State Electricity Board, it was not economically viable for any third party consumer to purchase power generated by the captive power plants owned by the assessee. The same necessarily had to be sold to the State Electricity Board. 11.5. It is stated that the assessee had been maintaining separate accounts for both the units. Supply of electricity from the captive power plants to its manufacturing units was made and recorded at the price at which electricity was sold by the State Electricity Board to the manufacturing units owned by the respondent assessee and to other industrial consumers, being the fair market value of electricity in terms of Section 80 IA (8) of the Act. According to the respondent, the determination of profits eligible for computation of deduction under Section 80 IA was supported by the following: (a) Computation of profits under Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sub-section (6B) of Section 80J of the Act. After referring to Circular No.169 dated 23.06.1975 of the Central Board of Direct Taxes (CBDT), respondent assessee has contended that sub-section (8) of Section 80 IA seeks to provide that the profits of the eligible business should be computed by reckoning inter unit transfer of goods and services at the price such goods would ordinarily fetch on sale in the open market. 11.9. Thereafter, respondent assessee has referred to the meaning of the expression market price and also various case laws on such meaning. Assessee has contended that in order to determine the market price of any goods or services, open market conditions must exist. In other words, there must be willingness on the part of the buyer to purchase and the seller to sell the goods. In such a situation, the price determined by the market forces of demand and supply is the market price of such goods. However, in case of any transaction of purchase and sale taking place on account of certain obligations on the part of either side affecting the determination of the price of the goods, such a price cannot be said to be the market price. 11.10. Elaborating further, res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s at the rate of Rs. 3.72 per unit. As against this, the State Electricity Board fixed the rate payable to the assessee for the surplus power generated and fed into the state grid at Rs. 2.32 per unit for the financial year 2000-2001 corresponding to the assessment year 2001-2002. 11.13. In the above context, respondent assessee has asserted that the rate fixed by the State Electricity Board for purchase of surplus power from the assessee cannot be treated as the market price of power. Assessee was under an obligation to sell the excess power to the State Electricity Board and at such a rate fixed by the agreement. It is mentioned that during the period under consideration, there was monopoly of State Electricity Board as far as power supply was concerned and there was no open market for sale and purchase of electricity. The rate prescribed by the State Electricity Board was the price imposed upon the assessee as a condition precedent to sell excess power to the only purchaser i.e. State Electricity Board. It is the price at which assessee had to supply electricity to the State Electricity Board under compulsion. Such a price cannot be regarded as determined by the market forces ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder dated 26.03.2004 and submits therefrom that the assessing officer was fully justified in holding that Rs. 3.72 per unit shown by the assessee as the rate at which it was supplying electricity to its captive industrial units, was not the true market value. Refuting the contention of the assessee, it is contended that the rate of Rs. 3.72 charged by the State Electricity Board from its consumers could not be treated as the true market value because the State Electricity Board had to take into account various factors while determining the rate of electricity. This included distribution losses, expenses on infrastructure for distribution of power, subsidy allowed to some categories of consumers like farmers, other administrative and management expenses including expenses on collection of bills etc. 12.3. He further submits that supply of surplus electricity by the assessee to the State Electricity Board was governed by an agreement entered into between the assessee and the State Electricity Board. This agreement was voluntarily entered into by the two parties i.e. the assessee and the State Electricity Board. It was a voluntarily agreement without any element of compulsion or f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... counsel has also referred to Section 80A more particularly to sub-section (6) thereof which he submits is pari-materia to the provision of sub-section (8) of Section 80 IA including the explanation thereto. He submits that the expression market value has been defined in relation to any goods or services sold or supplied to mean the price that such goods or services would fetch if those were sold by the undertaking or unit or enterprise or eligible business in the open market, subject to statutory or regulatory restrictions. Applying the above provision to the present case, he submits that the price at which surplus electricity was supplied by the assessee to the State Electricity Board was subject to the power purchase agreement which was a statutory arrangement. Therefore, the price paid by the State Electricity Board to the assessee for supply of excess electricity would be the market value which would mean that Rs. 2.32 per unit would be the market value of electricity supplied by the assessee to its captive industrial units. In this connection, learned counsel has also placed reliance on Circular No.5/2010 dated 03.06.2010 of the Central Board of Direct Taxes which clarifies ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty was supplied by the State Electricity Board to the industrial consumers including the assessee was in fact the market value of electricity per unit and thereby restoring the claim of the assessee. 13.1. Learned senior counsel submits that Section 80 IA provides for deduction in respect of profits and gains from industrial undertakings or enterprises engaged in infrastructure development etc. Assessee has industrial units for which uninterrupted power supply was required. Power supply by the State Electricity Board was found to be inadequate. Therefore, assessee had set up its own captive power plants to supply electricity to its industrial units. Surplus power was supplied to the state grid for which a power purchase agreement was entered into by the assessee with the State Electricity Board. Assessee had claimed deduction under this provision and while computing the deduction had taken the price at which electricity was supplied by the State Electricity Board to the industrial consumers including the assessee as the market value and not the price paid by the State Electricity Board to the assessee for the supply of surplus electricity. 13.2. It is pointed out that there i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t for electricity. In such situation, Tribunal was fully justified in holding that the rate at which electricity was supplied by the State Electricity Board to the industrial consumers was the market value of electricity supplied by the captive power plants of the assessee to its industrial units. He further submits that the rate at which the assessee had supplied surplus electricity to the State Electricity Board i.e. Rs. 2.32 per unit could not be termed as the market value in as much as that was the contracted price as per the power purchase agreement. Being a contracted price, the power tariff between the assessee and the State Electricity Board as per the power purchase agreement was not worked out in a competitive environment. 13.5 Referring to the provisions of the Electricity (Supply) Act, 1948 as well as the successor Electricity Act, 2003, learned counsel for the assessee submits that under the statutory regime prevalent at the relevant point of time, the State Electricity Board had virtual monopoly in the matter of generation and distribution of electricity. Though there was provision for generation of electricity for selfconsumption, the power purchase agreement ente ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terprise referred to in sub-section (4) (such business being hereinafter referred to as the eligible business), there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction from such profits and gains of an amount equal to hundred per cent of profits and gains derived from such business for the first five assessment years commencing at any time during the periods as specified in sub-section (2) and thereafter, twenty-five per cent of the profits and gains for further five assessment years : Provided that where the assessee is a company, the provisions of this sub-section shall have effect as if for the words twenty-five per cent , the words thirty per cent had been substituted. 15.1. From the above, what is evident is that where the gross total income of an assessee includes any profits and gains derived from any business of an industrial undertaking or an enterprise which are referred to in sub-section (4), referred to as eligible business, this section provides that a deduction shall be allowed in computing the total income. Such deduction shall be allowed from the profits and g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5: Provided that where an infrastructure facility is transferred on or after the 1st day of April, 1999 by an enterprise which developed such infrastructure facility (hereafter referred to in this section as the transferor enterprise) to another enterprise (hereafter in this section referred to as the transferee enterprise) for the purpose of operating and maintaining the infrastructure facility on its behalf in accordance with the agreement with the Central Government, State Government, local authority or statutory body, the provisions of this section shall apply to the transferee enterprise as if it were the enterprise to which this clause applies and the deduction from profits and gains would be available to such transferee enterprise for the unexpired period during which the transferor enterprise would have been entitled to the deduction, if the transfer had not taken place. Explanation. For the purposes of this clause, infrastructure facility means, (a) a road, bridge, airport, port, inland waterways and inland ports, rail system or any other public facility of a similar nature as may be notified by the Board in this behalf in the Official Gazette; ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plicable to an industrial undertaking which is set up in any part of India for the generation or generation and distribution of power if it begins to generate power at any time during the period commencing on the 1st day of April 1993 and ending on the 31st day of March, 2003; and starts transmission or distribution by laying a network of new transmission or distribution lines at any time during the period beginning on the 1st day of April, 1999 and ending on the 31st day of March, 2003. Proviso below clause (iv) says that such deduction shall be allowed only in relation to the profits derived from laying of such network of new lines for transmission or distribution. 15.5. Crucial to the present discourse is sub-section (8) of Section 80- IA. Sub-section (8) reads as under: (8) Where any goods held for the purposes of the eligible business are transferred to any other business carried on by the assessee, or where any goods held for the purposes of any other business carried on by the assessee are transferred to the eligible business and, in either case, the consideration, if any, for such transfer as recorded in the accounts of the eligible business does not correspond to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essing officer has the competence to recompute the profit by substituting the market value of such goods. The explanation below sub-section (8) defines the expression market value to mean the price that such goods or services would ordinarily fetch in the open market. That takes us to the expression open market which is however not defined. 15.8. Since the expression open market is not defined, we will analyze the said expression in conjunction with the expression market value , though at a subsequent stage of the judgment. 16. We may also advert to the relevant provisions of the Electricity (Supply) Act, 1948 (briefly the 1948 Act hereinafter), which was the enactment governing the field at the relevant point of time. As per Section 43 of the 1948 Act, the State Electricity Board was empowered to enter into arrangements for purchase or sale of electricity under certain conditions. Sub-section (1) says that the State Electricity Board may enter into arrangements with any person producing electricity within the State for purchase by the State Electricity Board on such terms as may be agreed upon of any surplus electricity which that person may be able to dispose of. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o deduction under Section 80-IA of the Act. For the purpose of computing the profits and gains of the eligible business, which is necessary for quantifying the deduction under Section 80-IA, the assessee had recorded in its books of accounts that it had supplied power to its industrial units at the rate of Rs. 3.72 per unit which rate is disputed by the revenue as not being the market value of electricity. 19. While the assessing officer accepted the claim of the assessee for deduction under Section 80-IA, he, however, did not accept the profits and gains of the eligible business computed by the assessee on the ground that those were inflated by showing supply of power to its own industrial units for captive consumption at the rate of Rs. 3.72 per unit. Assessing officer took the view that there was no justification on the part of the assessee to claim electricity charge at the rate of Rs. 3.72 for supply to its own industrial units when the assessee was supplying surplus power to the State Electricity Board at the rate of Rs 2.32 per unit. Finally, the assessing officer held that Rs. 2.32 per unit was the market value of electricity and on that basis, reduced the profits and ga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the market value of such good, then he has to compute the sale price of the good at the market value as per his determination. The explanation below the proviso defines market value in relation to any goods to mean the price that such goods would ordinarily fetch on sale in the open market. Thus, as per this definition, the market value of any goods would mean the price that such goods would ordinarily fetch on sale in the open market. 23. This brings to the fore as to what do we mean by the expression open market which is not a defined expression. 24. Black s Law Dictionary, 10th Edition, defines the expression open market to mean a market in which any buyer or seller may trade and in which prices and product availability are determined by free competition. P. Ramanatha Aiyer s Advanced Law Lexicon has also defined the expression open market to mean a market in which goods are available to be bought and sold by anyone who cares to. Prices in an open market are determined by the laws of supply and demand. 25. Therefore, the expression market value in relation to any goods as defined by the explanation below the proviso to sub-section (8) of Section 80 IA would mea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee and the State Electricity Board cannot be said to be an exercise between a buyer and a seller in a competitive environment or in the ordinary course of trade and business i.e., in the open market. Such a price cannot be said to be the price which is determined in the normal course of trade and competition. 27. Another way of looking at the issue is, if the industrial units of the assessee did not have the option of obtaining power from the captive power plants of the assessee, then in that case it would have had to purchase electricity from the State Electricity Board. In such a scenario, the industrial units of the assessee would have had to purchase power from the State Electricity Board at the same rate at which the State Electricity Board supplied to the industrial consumers i.e., Rs. 3.72 per unit. 28. Thus, market value of the power supplied by the assessee to its industrial units should be computed by considering the rate at which the State Electricity Board supplied power to the consumers in the open market and not comparing it with the rate of power when sold to a supplier i.e., sold by the assessee to the State Electricity Board as this was not the rate at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the view that the market value of the power supplied by the State Electricity Board to the industrial consumers should be construed to be the market value of electricity. It should not be compared with the rate of power sold to or supplied to the State Electricity Board since the rate of power to a supplier cannot be the market rate of power sold to a consumer in the open market. The State Electricity Board s rate when it supplies power to the consumers have to be taken as the market value for computing the deduction under Section 80-IA of the Act. 31. That being the position, we hold that the Tribunal had rightly computed the market value of electricity supplied by the captive power plants of the assessee to its industrial units after comparing it with the rate of power available in the open market i.e., the price charged by the State Electricity Board while supplying electricity to the industrial consumers. Therefore, the High Court was fully justified in deciding the appeal against the revenue. 32. Revenue has relied upon the decision of the Calcutta High Court in CIT Vs. ITC Ltd. (supra). In that case, the High Court rejected the first contention of the revenue that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inserted in the statute with effect from 01.04.2009 whereas in the present case we are dealing with the assessment year 2001-2002 when this provision was note even borne. 34. That being the position, we have no hesitation in answering this issue in favour of the assessee and against the revenue. EXERCISE OF OPTION TO ADOPT WRITTEN DOWN VALUE METHOD. 35. We may now take up the first of the three additional issues. As we have noted at the very outset, the issue is or the question raised by the revenue is whether the Tribunal could ignore compliance to the statutory provisions relating to exercise of option to adopt Written Down Value (WDV) method in place of the straight line method while computing depreciation on the assets used for power generation. This issue has been raised by the revenue in Civil Appeal No. 13771/2015 (CIT Vs. M/s Jindal Steel and Power Ltd.) in the following manner: Whether on the facts and in the circumstances of the case, the High Court was justified in upholding the order of the Tribunal that compliance to statutory provisions of exercising option to adopt WDV method in place of straight line method prescribed under the statutory provision on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red this question in favour of the assessee. 39. When the matter came up before the High Court in appeal by the revenue under Section 260A of the Act, the High Court referred to the proviso to sub-rule (1A) of Rule 5 of the Rules and affirmed the view taken by the Tribunal. The High Court held that there was no perversity in the reasoning of the Tribunal and therefore, the question raised by the revenue could not be said to be a substantial question of law. 40. Rule 5 provides for the method of calculation of depreciation allowed under Section 32 (1) of the Act. It says that such depreciation of any block of assets shall be allowed, subject to provisions of sub-rule (2), as per the specified percentage mentioned in the second column of the table in Appendix-I to the Rules on the WDV of such block of assets as are used for the purposes of the business or profession of the assessee during the relevant previous year. In so far the present case is concerned, it is not in dispute that sub-rule (2) has no application. We may, therefore, refer to sub-rule (1A) along with the provisos thereto which read as under: (1A) The allowance under clause (i) of sub-section (1) of section 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 02-2003 as well as to Appendix-1A. Appendix-1 provides for a table of rates at which depreciation is admissible. While the first column refers to the block of assets, such as, tangible assets, including buildings, furniture and fittings, machinery and plant etc., and intangible assets, the second column mentions the relatable depreciation allowance as per percentage of WDV. On the other hand, Appendix-1A has been inserted by the Income Tax (Twelfth Amendment) Rules, 1997 with retrospective effect from 02.04.1997. While column one of Appendix-1A mentions about the class of assets, column two provides for the relatable depreciation allowance of such class of assets as per the percentage of actual cost. From a comparison of the two appendixes, it is evident that the depreciation allowance as per percentage of WDV in Appendix-1 is higher than the depreciation allowance as per percentage of actual cost under Appendix-1A. 42. From a conjoint reading of Rules 5(1) and (1A) of the Rules read with Appendix-1 and Appendix-1A, it is evident that while subrule (1) provides for allowance of depreciation in respect of any block of assets in terms of the second column of the table in Appendix ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the aforesaid principle to the facts of the present case, we are in agreement with the view expressed by the Tribunal and the High Court that there is no requirement under the second proviso to sub-rule (1A) of Rule 5 of the Rules that any particular mode of computing the claim of depreciation has to be opted for before the due date of filing of the return. All that is required is that the assessee has to opt before filing of the return or at the time of filing the return that it seeks to avail the depreciation provided in Section 32 (1) under subrule (1) of Rule 5 read with Appendix-I instead of the depreciation specified in Appendix-1A in terms of sub-rule (1A) of Rule 5 which the assessee has done. If that be the position, we find no merit in the question proposed by the revenue. The same is therefore answered in favour of the assessee and against the revenue. DELETION OF ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF PAYMENT MADE BY THE ASSESSEE TO SHRI S.K. GUPTA AND HIS GROUP OF COMPANIES. 46. This brings us to the second of the additional issues which is the deletion of the addition of Rs. 3,39,95,000.00 made by the assessing officer on account of payment ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in a statement recorded on 08.02.2007. We find that in the later statements, Shri S.K. Gupta had categorically stated that he had rendered services to the assessee. He also mentioned that the name of the assessee was not referred to as one of the beneficiaries of the accommodation bills in his earlier statement. He had categorically stated that he had rendered service to the assessee and that the assessee had not obtained any bogus accommodation bills from him. Assessing officer had dis-believed the affidavit as well as the subsequent statement of Shri S.K. Gupta without any justifiable and cogent reason. That apart when the revenue had relied upon the retracted statement of Shri S.K. Gupta, it ought to have provided an opportunity to the assessee to cross-examine Shri S.K. Gupta which was however denied. Thus, revenue was not justified in disallowing the claim of professional expenses of the assessee on account of payment to Shri S.K. Gupta and his group of companies. 52. Therefore, we agree with the view taken by the High Court. As noted by the High Court, the entire issue is based on appreciation of the materials on record. Tribunal had scrutinized the materials on record and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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