2018 (3) TMI 952 - AT - Income Tax

Short granting of deduction u/s. 35DDA - Held that - In view of the fact that the similar issue is pending before the Ld.CIT(A) for the Assessment Year 2006-07 for adjudication, we restore this issue to the file of the Ld.CIT(A) who shall consider the issue and decide afresh in accordance with law. Erroneous directions given by the Ld.CIT(A) in respect of the payment made to employees on individual negotiations under separate scheme not forming part of Voluntary Retirement Scheme VRS - Reopening of assessment - Held that - Assessment Order passed on 24.03.2014 u/s.143(3) r.w.s. 147 of the Act for the Assessment Year 2004-05, the Assessing Officer disallowed ₹.32,95,324/- being 1/5th of expenses of ₹.1,69,10,939/- claimed as deduction u/s. 35DDA of the Act and these expenses represent the payments made to the employees on their separation from the company and not forming part of VRS. Therefore, since the Assessing Officer had already disallowed expenses by reopening the assessment for Assessment Year 2004-05, there is no need for reopening and examining the issues again hence to that extent we reverse the findings of the Ld.CIT(A). Disallowance of depreciation on fixed assets - Held that - The basic documents like Bills, vouchers in respect of the fixed assets were not produced either before the Assessing Officer or before the Ld.CIT(A) to prove that the assessee had in fact acquired assets. In the absence of such documentary evidence, the depreciation cannot be allowed Additional depreciation u/s.32(1)(iia) - as contended that additional deprecation was claimed by the assessee while preparing and filing its return for the year - appeal not made in original return -Held that - The submissions of the assessee were not appreciated by the Ld.CIT(A) and not entertained the claim observing that this issue does not arise from Assessment Order. In the case of CIT v. Pruthvi Brokers and Shareholders (P.) Ltd. (2012 (7) TMI 158 - BOMBAY HIGH COURT) the Hon ble Jurisdictional High Court held that assessee is entitled to raise not merely additional legal submissions before the Appellate Authorities but is also entitled to raise additional claims before them. Since the assessee made this claim for additional depreciation before the Ld.CIT(A), he should have entertained or rejected the claim of the assessee. In the circumstances, we restore this issue to the file of the Ld.CIT(A) reexamine it Set-off of brought forward business losses - Held that - We find that this ground is only a consequential in nature and the Assessing Officer shall pass appropriate orders based on the issues decided in the Assessment Years 2006-07 and 2007-08. If the assessee is eligible to carry forward the losses from the Assessment Year 2006-07 and 2007-08 the same may be considered and appropriate order may be passed in accordance with law for the Assessment Year 2008-09.

Summary

Issues:
1. Short granting of deduction u/s. 35DDA for Assessment Year 2007-08.
2. Erroneous directions on payments made to employees under separate scheme for Assessment Year 2007-08.
3. Short granting of deduction u/s. 35DDA for Assessment Year 2008-09.
4. Disallowance of depreciation on fixed assets for Assessment Year 2008-09.
5. Not allowing additional depreciation u/s. 32(1)(iia) on fixed assets for Assessment Year 2008-09.
6. Set-off of brought forward business losses for Assessment Year 2008-09.

Analysis:
1. Short granting of deduction u/s. 35DDA for Assessment Year 2007-08:
The Tribunal noted that a similar issue was pending before the Ld.CIT(A) for the previous year and decided to restore the issue for fresh adjudication in accordance with the law.

2. Erroneous directions on payments made to employees under separate scheme for Assessment Year 2007-08:
The Tribunal reversed the Ld.CIT(A)'s findings as the expenses were already disallowed by the Assessing Officer through reopening the assessment for the previous year, thus rendering the directions erroneous.

3. Short granting of deduction u/s. 35DDA for Assessment Year 2008-09:
Since the issue was already restored to the file of the Ld.CIT(A) for the previous years, the Tribunal decided to restore this issue for fresh consideration in accordance with the law.

4. Disallowance of depreciation on fixed assets for Assessment Year 2008-09:
The Assessing Officer disallowed depreciation due to the assessee's failure to produce bills and vouchers for fixed assets. The Tribunal upheld the disallowance as essential documents were not provided, except for certain assets, where partial depreciation was allowed.

5. Not allowing additional depreciation u/s. 32(1)(iia) on fixed assets for Assessment Year 2008-09:
The Tribunal directed the Ld.CIT(A) to examine the claim for additional depreciation as it was a legal claim and permissible to raise fresh claims before the Appellate Authorities, citing relevant case law.

6. Set-off of brought forward business losses for Assessment Year 2008-09:
The Tribunal considered this issue as consequential to previous years and directed the Assessing Officer to pass appropriate orders based on the decisions for the earlier years, allowing set-off of losses if eligible.

In conclusion, the appeals were partly allowed for statistical purposes, and the Tribunal restored several issues for fresh consideration or examination by the Ld.CIT(A) in accordance with the law.