2013 (6) TMI 734 - HC - Income Tax

Tax Appeal is admitted on the following substantial questions of law - (B) Whether the Tribunal is right in law and on facts in reversing the order passed by the CIT(A) and thereby deleting the disallowance of ₹ 5,00,000/- in respect of depreciation on multimodal project, Ambaji? (C) Whether the Tribunal is right in law and on facts in confirming the order passed by the CIT(A) in restricting the addition on account of prior period expenses to ₹ 43,81,470/- and granting relief of ₹ 1,09,89,354/-?

Summary

Issues:
1. Disallowance of project expenses treated as capital in nature
2. Disallowance of depreciation on multimodal project
3. Restriction on prior period expenses addition
4. Provision for obsolete stock/stores without evidence

Analysis:

1. Disallowed Project Expenses: The Revenue appealed against the ITAT's order deleting the disallowance of project expenses amounting to Rs. 57,92,357 treated as capital in nature. The Senior Counsel for the Revenue conceded similarity with a previous case and requested withdrawal for correction. The Court dismissed this part of the appeal with liberty to file a Miscellaneous Application for correction.

2. Depreciation Disallowance: The appeal also challenged the deletion of Rs. 5,00,000 disallowed as depreciation on the multimodal project, Ambaji. The Senior Counsel highlighted that another appeal on similar grounds against the same assessee for earlier years was admitted. The Court admitted this issue for further consideration.

3. Prior Period Expenses: The Tribunal confirmed the CIT(A)'s order restricting the addition of prior period expenses to Rs. 43,81,470 and granting relief of Rs. 1,09,89,354. This issue was admitted for hearing along with another appeal from a previous year involving the same assessee.

4. Obsolete Stock/Stores Provision: The Tribunal upheld the CIT(A)'s decision to restrict the provision for obsolete stock/stores from Rs. 3,28,049 to Rs. 82,049 due to lack of evidence from the assessee. The Court noted the small amount involved but clarified that not entertaining the appeal did not signify approval of the Tribunal's decision.