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2020 (5) TMI 374 - AT - Income TaxCondonation of delay - delay of 368 (Three Six Eight) days - HELD THAT - Decisions of the Hon'ble Supreme Court in the case of Collector, Land Acquisition Vs. Mst.Katiji Ors 1987 (2) TMI 61 - SUPREME COURT and the decision in the case of CIT Vs. K.S.P.Shanmugavel Nadar 1984 (4) TMI 24 - MADRAS HIGH COURT we find that the assessee is not benefitting in any way by not filing the appeal in time before the Tribunal. The assessee has explained the reasons as misplacement of papers by one of the office staff. This is one of the possible reasons for not being able to file the appeal within the time. Further, after hearing the assessee on merits also, we find that the assessee has an arguable case on merits. Hence, we are inclined to condone the delay of 368 (Three Six Eight) days and proceed to dispose-of the appeal on merits. Value of assets for the purpose of calculation of depreciation - total value of the assets, namely 'Plant and Machinery' sold during the year was only and the Appellant itself deleted this value from block of assets, for the purpose of calculation of depreciation - HELD THAT - We find that the Hon'ble High Court of Bombay in the case of CIT Vs. Parle Soft Drinks (Bangalore (P) Ltd) 2017 (11) TMI 1311 - BOMBAY HIGH COURT has held that the sale proceeds of soft drink bottles being capital assets, could not be held to be a revenue receipt and after sale of old bottles, block of assets had to be reduced by amount of whole proceeds and accordingly, whatever was there in block of assets, depreciation had to be allowed in accordance with the provisions of law. It is clear that u/s.43(6) of the Act, the WDV of the block of assets is to be reduced by the sale proceeds received on sale of one or more of the assets from the block and not the entire WDV of the said asset. Therefore, we direct the AO to reduce only the sale proceeds only from the WDV of the block of the assets and allow the depreciation on the balance of the WDV. Appeal of assessee is allowed.
Issues involved:
1. Condonation of delay in filing the appeal before the Tribunal. 2. Merits of the case regarding the treatment of the sale of Plant & Machinery for taxation purposes. Detailed Analysis: 1. Condonation of Delay: The appeal before the Tribunal faced a delay of 368 days, and the assessee sought condonation, citing misplacement of papers by office staff as the reason beyond their control. The Departmental Representative (DR) opposed the delay condonation, questioning the lack of details about the staff responsible for the delay. The Tribunal considered relevant case law and found that the delay was not advantageous to the assessee, who had a plausible case on merits. Relying on Supreme Court and High Court decisions, the Tribunal accepted the explanation of misplacement of papers as a valid reason and proceeded to hear the appeal on merits. 2. Merits of the Case: The assessee, a company involved in steel door manufacturing, declared income for the relevant assessment year. During assessment, the Assessing Officer (AO) noted a sale of Plant & Machinery for a specific amount. The AO found discrepancies in the evidence provided by the assessee regarding the sale, leading to a tax adjustment. The CIT(A) upheld the AO's decision, prompting the assessee to appeal. The grounds of appeal challenged the treatment of the sale proceeds and the reduction of the written down value (WDV) of assets. The counsel for the assessee argued that as per Section 43(6)(c) of the Income Tax Act, only the value received on the sale of an asset should reduce the WDV, not the entire WDV. Citing relevant case law, including decisions from the High Court of Bombay and a Tribunal case, the Tribunal agreed with the assessee's interpretation of the law. Consequently, the Tribunal directed the AO to reduce only the actual sale proceeds from the WDV of the block of assets and allow depreciation on the remaining balance. In conclusion, the Tribunal allowed the appeal of the assessee based on the correct interpretation of tax provisions and directed the AO to adjust the tax liability accordingly.
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