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2016 (4) TMI 81 - ITAT CHENNAIDisallowance of deduction u/s 80IA - profit by way of generation of electricity which was actually consumed by the assessee in the production of cement - Held that:- The assessee is eligible for deduction u/s 80IA of the Act even in respect of the power generated and used for captive consumption. By respectfully following the judgment of the Madras High Court in assessee’s own case for assessment year 2001-02, the orders of the lower authorities are set aside and the Assessing Officer is directed to allow deduction u/s 80IA on the profit arising out of generation of power which was used for captive consumption. - Decided in favour of assessee Disallowance of depreciation on the building added in the captive power plant - Held that:- Apex Court in CIT vs Karnataka Power Corporation ( 2000 (7) TMI 72 - SUPREME Court ), found that the assessee is eligible for additional depreciation. In fact, the CIT(A) has granted additional depreciation for assessment year 2003-04. This was challenged by the Revenue before this Tribunal. The Tribunal confirmed the order of the CIT(A) wherein additional depreciation was allowed. In view of the above, this Tribunal is of the considered opinion that the assessee is eligible for additional depreciation as claimed - Decided in favour of assessee Depreciation on goodwill - Held that:- Goodwill is nothing but an intangible asset. Explanation 3 to sec.32 clearly says that intangible assets being know-how, patents, copyrights, trademarks, licences, franchises or any other business or commercial rights of similar nature, is eligible for depreciation. The goodwill being a commercial right acquired by the assessee is eligible for depreciation u/s 32 of the Act. Therefore, the CIT(A) has rightly allowed the claim of the assessee - Decided in favour of assessee Provision made for doubtful advances - Held that:- The assessee claims that the provision which was made earlier was added back to the total income and offered for taxation. Once the advance made by the assessee was subject matter of taxation at the time of provision, the same cannot be added to the total income when it was actually written off. This Tribunal is of the considered opinion that disallowing would amount to double taxation. In view of the above, this Tribunal is of the considered opinion that the CIT(A) has rightly allowed the claim of the assessee .- Decided in favour of assessee Additional depreciation on addition made to plant and machinery - Held that:- The additional machinery purchased by the assessee is for running the machinery efficiently, therefore, it has to be considered whether the upgradation made by the assessee would amount to installation of a new machinery. The CIT(A) proceeded on the presumption that the additional claim on upgradation is concerned, it was already on record that the plant and machinery was acquired and used in the immediately preceding year of assessment. In fact, this Tribunal, in assessee’s own case for assessment year 2003-04, considered this issue and found that building for housing thermal power plant is eligible for depreciation at higher rate. The additional plant and machinery used for upgrading the existing machinery is also eligible for additional depreciation. Therefore, this Tribunal is unable to uphold the orders of the lower authorities. Accordingly, the orders of the lower authorities are set aside and the Assessing Officer is directed to allow additional depreciation on the additional plant and machinery. - Decided in favour of assessee Reopening of assessment - Held that:- The Assessing Officer reopened the assessment on the ground that provision made for bad and doubtful debts was not added back to the book profits. In the original assessment, the Assessing Officer has not discussed anything about the provision made for bad and doubtful debts. Therefore, this Tribunal is of the considered opinion that the Assessing Officer has rightly reopened the assessment by issuing notice u/s 148 of the Act. This Tribunal do not find any reason to interfere with the order of the CIT(A). Bad and doubtful debts while computing the book profit u/s 115JB of the Act - Held that:- Section 115JB(2) Explanation 1 (c) clearly says that the book profits computed under the Companies Act are to be increased by an amount or amounts set aside for provision made for meeting liabilities other than ascertained liabilities. Since bad and doubtful debts are part of the unascertained liabilities, they need to be added back to the book profits while making adjustment u/s 115JB of the Act
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