2015 (6) TMI 364 - AT - Income Tax

Additions on account of consumption of electricity - CIT(A) deleted the addition - Held that - The Assessing Officer has neither made comparative analysis of consumption of electricity with identical cases nor has he made any comparative analysis with the assessee s own case for the earlier years, thus, there was no justification in making the addition of ₹ 5 lakhs on ad-hoc basis. First Appellate Authority has rightly deleted the addition in dispute by giving very much logical reason as above. - Decided against revenue. Additions on account of provision for gratuity and leave encashment under Section 43B - the assessee has claimed that by mistake it has added back excess sum - Held that - in the computation sheet of income, the assessee had added back gratuity and leave encashment at ₹ 22,85,832/- and ₹ 21,22,298/- respectively on account of un-paid liability in view of the provisions of Section 43B of the Act. He again held that the assessee had simply asked for adopting the correct figures which in fact was only a prayer to rectify a mistake apparent on record and it did not amount to lodging of a fresh claim and he deleted the addition in dispute, as pointed out in the revenue appeal. We are of the view that the findings given by the learned First Appellate Authority is very much as per law, therefore we are fully agree with the same by upholding the impugned order on this very issue - Decided against revenue. Additional depreciation claimed under Section 32(1)(iia) on plant and machinery - Held that - First Appellate Authority has wrongly rejected the claim of the assessee by upholding the findings of the Assessing Officer. As a matter of record, the assessee made the claim in dispute during the assessment proceedings and the same cannot be simply rejected on the ground that the assessee should have filed the revised return, which the assessee has not filed within time. Thus set aside the issue in dispute to the Assessing Officer with the direction that the claim for addition of depreciation on plant of machinery amounting to ₹ 6,29,28,039/- filed by the assessee in its reply dated 29.11.2011 may be allowed, if the assessee fulfils the condition enumerated under Section 32 of the Act. - Decided in favour of assessee for statistical purposes.

Summary

Issues Involved:
1. Deletion of additions on account of consumption of electricity.
2. Allowance of excess claim on account of provisions for gratuity and leave encashment under Section 43B.
3. Addition of depreciation claimed by the assessee under Section 32(1)(iia) on plant and machinery.

Detailed Analysis:

1. Deletion of Additions on Account of Consumption of Electricity:
The Revenue contested the deletion of Rs. 5,00,000/- added by the Assessing Officer (AO) due to discrepancies in electricity consumption per unit of production. The AO found variations in monthly electricity consumption vis-`a-vis production. However, the learned Commissioner of Income Tax (Appeals) [CIT(A)] deleted this addition, citing a lack of comparative analysis with identical cases or the assessee's own historical data. The Tribunal upheld the CIT(A)'s decision, agreeing that the AO's addition was without basis and not sustainable in law.

2. Allowance of Excess Claim on Account of Provisions for Gratuity and Leave Encashment under Section 43B:
The AO disallowed the assessee's claims for excess provisions for gratuity (Rs. 18,28,034/-) and leave encashment (Rs. 8,38,238/-), arguing that these claims amounted to a revision of the return, which was not permissible after the due date. The CIT(A) found that these were not fresh claims but corrections of apparent mistakes in the computation of income. The Tribunal agreed with the CIT(A), noting that the corrections were justified and did not constitute fresh claims. Thus, the Tribunal upheld the CIT(A)'s deletion of these additions.

3. Addition of Depreciation Claimed by the Assessee under Section 32(1)(iia) on Plant and Machinery:
The assessee claimed additional depreciation of Rs. 6,29,28,037/- on plant and machinery, which was disallowed by the AO on the grounds that it was a fresh claim made after the deadline for filing a revised return. The CIT(A) upheld the AO's decision, stating that the claim was not admissible as it was a fresh claim made post the due date. The Tribunal, however, found that the claim for additional depreciation was a statutory right and should be allowed if the conditions under Section 32 of the Act were met. The Tribunal set aside the issue to the AO, directing that the claim be allowed if the statutory conditions were fulfilled.

Conclusion:
The Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s deletions regarding electricity consumption and provisions for gratuity and leave encashment. The Tribunal allowed the assessee's appeal for statistical purposes, directing the AO to reconsider the claim for additional depreciation under Section 32(1)(iia), provided the statutory conditions were met. The judgment emphasizes the importance of statutory rights and the correction of apparent mistakes in tax computations.