9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2010 (11) TMI 675 - AT - Income TaxDepreciation - SLM or WDV - this issue to be squarely covered in favour of the assessee by the decision of the ITAT in assessee s own case for A.Y.2002-03 vide ITA No.1221/Ahd/2006 dated 3-3-2009 - Held that As regards claim of depreciation of WDV basis as against claimed allowed as per SLM basis as per original return ld.counsel for the assessee submitted that the assessee can alter the claim of depreciation by filing revised return - Appeal is allowed Regarding disallowance u/s 14A - ITAT has considered identical issue in assessee s own case for A.Y.2002- 03 and 2003-04 and has set aside the same back to the file of the AO - Appeal is allowed by way of remand to AO Regarding disallowance of prior period expense - Since the assessee is following mercantile system of accounting they were asked to explain reasons and justification of debiting the P and L A/c of current year with the expenditure pertaining to earlier years as mentioned in the Tax Audit Report - it is evident that before the AO the assessee produced the details of only Rs.19, 24, 046/-. Even in respect of such details the claim of the assessee was vague because the assessee mentioned that these expenditure were either crystallized/settled during the year or were allowable on cash basis as per Section 43B of the Income Tax Act - Appeal is allowed by way of remand to AO Regarding purchase of power - this issue is covered in favour of the assessee by the decision of the ITAT in assessee s own case for A.Y.2003-2004 (supra) - The mere fact that the assessee has disputed the bill amount does not empower the Assessing Office to disallow the claim in full. The dispute is in respect of quantum only and not in respect of actual use of Electricity for business purposes of the assessee - Decided in favour of the assessee
Issues Involved:
1. Depreciation method (SLM vs. WDV) 2. Disallowance of expenses under Section 14A 3. Prior period expenses 4. Disputed liability for power purchase from GEB 5. Charging of interest under Section 234B 6. Quantification of unabsorbed depreciation and carry forward of business loss Detailed Analysis: 1. Depreciation Method (SLM vs. WDV): The assessee contested the Assessing Officer's (AO) decision to grant depreciation based on the Straight Line Method (SLM) instead of the Written Down Value (WDV) method, which resulted in a lower depreciation amount. The ITAT found the issue to be covered in favor of the assessee by its own decisions in previous years (A.Y. 2002-03 and 2003-04). The Tribunal reiterated that the assessee could alter the claim of depreciation by filing a revised return, even if the revised return was filed beyond the period prescribed under Section 139(1). Consequently, the ITAT directed the AO to allow depreciation on the WDV method as claimed in the revised return. 2. Disallowance of Expenses Under Section 14A: The assessee challenged the disallowance of Rs. 6,00,000 as expenses attributable to earning exempt income under Section 14A, arguing that no dividend was received during the year and there was no nexus between borrowed funds and investments. The ITAT noted that similar issues in previous years (A.Y. 2002-03 and 2003-04) were set aside to the AO for re-adjudication. Following the same approach, the ITAT set aside the order of the authorities below and restored the matter back to the AO for re-adjudication in accordance with the law. 3. Prior Period Expenses: The AO disallowed Rs. 33,15,639 as prior period expenses, while the CIT(A) allowed Rs. 13,19,314 and disallowed Rs. 1,04,732 and Rs. 15,00,058. The ITAT noted that the issue was set aside to the CIT(A) for fresh adjudication in A.Y. 2003-04. The Tribunal found the need for proper examination of whether the liability for prior period expenses was crystallized during the year under consideration or covered by Section 43B. The matter was restored to the AO with directions to allow the assessee to produce evidence and pass a speaking order. 4. Disputed Liability for Power Purchase from GEB: The assessee contested the disallowance of Rs. 24,03,599 paid to GEB for power purchase, arguing that the liability was disputed. The ITAT found that in A.Y. 2003-04, it was held that the mere dispute over the bill amount did not justify disallowing the claim in full, as the electricity was consumed for business purposes. Following this precedent, the ITAT allowed the assessee's appeal on this ground. 5. Charging of Interest Under Section 234B: The assessee argued that the issue of charging interest under Section 234B was consequential. The ITAT directed the AO to re-compute the interest in accordance with the law after the final determination of income. 6. Quantification of Unabsorbed Depreciation and Carry Forward of Business Loss: The assessee requested the AO to quantify unabsorbed depreciation and carry forward business loss in light of the ITAT's decision for A.Y. 2002-03. The ITAT found this request to be fair and reasonable, directing the AO to give effect to the ITAT's order and work out the unabsorbed depreciation or business loss accordingly. Conclusion: The ITAT allowed the assessee's appeals partly and deemed the Revenue's appeals allowed for statistical purposes, with orders for re-adjudication and re-computation on several issues. The judgment emphasized adherence to legal precedents and proper examination of evidence in determining the final tax liabilities.
|
