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TMI Blog2008 (12) TMI 246X X X X Extracts X X X X X X X X Extracts X X X X ..... nt's own case for earlier years on the same facts, against all principles of judicial discipline. 1.3 That the CIT(A) erred on facts and in law in rejecting the application filed by the appellant under r. 46A of the IT Rules, 1962 ('the Rules') in respect of additional evidence filed relating to number of workers engaged by the appellant during the assessment year under appeal. 1.4 That the CIT(A) erred on facts and in law in holding that the value of the machinery previously used and transferred to a unit eligible for deduction under s. 80-IB of the Act is to be taken at market value and not at the WDV for the purpose of sub-s. (2) thereof." 3. The assessee company is in the business of wire line logging and perforation operation. As per the assessee, its operation are primarily to ascertain, for mainly ONGC and OIL, whether any oil/gas is present in well, the depth and quantity thereof, if it could be produced, and to assist in converting the potential well into a production well. The data regarding the substrata is collected by lowering sensors in the well dug by the oil companies which is stated to be pointed on paper. This is stated to be the article or tiling produced. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oil wells within the predefined area of operation of each unit during the exploration, development and production cycle of the well, resulting in the production of logs thereof. The assessee submitted that the logs wherein article of thing and the process generating scene amounted to movement (sic)/production. 7. Before the AO, the assessee placed reliance upon the decision of the Tribunal in the assessee's own case, where deduction under ss. 80HH and 80-I and 80-IA were allowed on these activities with a direction to verity whether other conditions of these sections were satisfied or not. The assessee also relied upon the decision of learned CIT(A) in the asst. yr. 1999-2000 holding that the assessee was eligible for deduction under s. 80-IB of the Act. 8. The case was fully discussed and deliberated upon with the assessee by the AO. The AO then considered the submission of the assessee. The AO further stated that the Department has filed an appeal before the High Court against the order of the Tribunal holding the assessee's activities as amounting to manufacture or production, and the order of the High Court was still awaited. Following the assessment orders of earlier years ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 80HH were fulfilled by the assessee. Further, in the asst. yrs. 1993-94, 1994-95, 1995-96 and 1997-98, the Tribunal following its earlier orders for-the asst. yrs. 1991-92 and 1992-93 decided the issue in favour of the assessee holding that the activities undertaken by the assessee amounted to manufacturing or producing any article or tiring. Further, in the asst. yrs. 1996-97 and 1998-99, the Tribunal again decided the issue in favour of the assessee by following the earlier years' orders for the asst. yrs. 1989-90 and 1990-91 rendered in the context of allowing investment allowance under s. 32A of the Act, and in the matter of allowing deduction under ss. 80-I, 80-IA and 80HH in the asst. yrs. 1992-93 and 1993-94. Similarly, in the asst. yr. 1999-2000, the Tribunal followed its orders of earlier years and decided the issue in favour of the assessee. Further in the asst. yr. 2001-02, the identical issue was decided in favour of the assessee by following the Tribunal's order in earlier years as mentioned above. 13. Since the facts and circumstances of the case in the present year are quite identical to that of immediate earlier preceding years, we are inclined to follow the deci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... admitted the additional evidences or materials sought to be filed by the assessee before him and then he should have decided the issue on merit. We, therefore, restore this issue back to the file of the learned CIT(A) for his fresh adjudication after allowing the assessee to produce or furnish any other evidences or documents or other contention or contentions in support of its case and also after giving an opportunity to the AO to have his say in respect of additional evidences or materials that may be filed by the assessee before the learned CIT(A). The learned CIT(A) shall decide the matter afresh after providing opportunity of being heard to both the parties. 18. One more reason given by the AO for rejecting the assessee's claim of deduction under s. 80-IB is that the value of the machinery previously used and then transferred by the assessee to the eligible unit exceeded the specified percentage provided under s. 80-IB of the Act. The AO has observed as under: "2.3.2 It is also noticed that the assessee had a Rajasthan unit in asst. yr. 2001-02, whereas it is not seen in the present assessment. When queried, it was reported, vide order sheet noting dt. 24th March, 2005 tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y or plant used in the business, then for the purpose of cl. (ii) of sub-s. (2) of s. 80-IB, the condition that the undertaking is not formed by the transfer to a new business of machinery or plant previously used for any purpose shall be deemed to have been complied with. In the light of the aforesaid explanation, it is thus necessary first to ascertain the total value of the machinery or plant used in the eligible business and the total value of the machinery or plant transferred to the eligible new business which was previously used for other business. The Expln. 2 speaks of expression "total value" without specifying whether value is to be meant as "fair market value" or "book value" or "WDV". The fact remains that the assessee has transferred these used equipments at the WDV, which goes to prove that the assessee is taking the benefit either of claiming depreciation or of computing the WDV of block of assets with reference to the WDV taken in the books of account. The legislature has nowhere stated that for the purpose of Expln. 2, the value of the machinery should be taken at market value and not the value as recorded in the books of account. It is well-settled principle of l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chinery being used in mineral oil concerns. 2.2 That the CIT(A) erred on facts and in law in not following the order of the Tribunal allowing 100 per cent depreciation on the enhanced value of the fixed assets consequent to reinstatement of foreign currency liability due to foreign exchange fluctuations holding the same to be only a notional liability, which had not crystallized." 22. We have heard both the parties and have carefully gone through the orders of the authorities below. In the course of hearing of this appeal, it was pointed out by the learned counsel for the assessee that this issue had come for consideration before the Tribunal in the assessee's own case for earlier years which was followed in the asst. yr. 2001-02, where Tribunal after following the Tribunal's decision of earlier years directed the AO to allow the claim of the assessee for higher depreciation in respect of plant and machinery claimed to be used in the field operation in mineral oil concern. The Tribunal's order dt. 30th Nov., 2007 for the asst. yr. 2001-02 vide ITA No. 1855/Del/2005 is placed on pp. 152 to 157 of the paper book filed by the assessee. Respectfully following the Tribunal's order o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would correspondingly be permitted to be reworked out for the purpose of repayment or depreciation or investment allowance, as the case may be, with reference to the rate prevailing on the last day of the financial year in which the fluctuation occurs. It was also held therein that in determining whether there is in fact accrual of liability or income, the accounting standards prescribed by the ICAI had to be followed and applied. It was also held that the amendment to s. 43A w.e.f. 1st April, 2003, is prospective. 28. Respectfully following the principle laid down by the jurisdictional Delhi High Court in the case of CIT vs. Woodward Governor India (P) Ltd. Ors., we hold that the assessee's claim of liability on account of foreign exchange fluctuation shall be allowed on accrual basis with reference to the rate of foreign exchange at the end of the year. The AO shall worked out the liability and allow the same accordingly. 29. Ground No. 4 is directed against the learned CIT(A)'s order in sustaining the disallowance made by the AO under s. 14A to the extent of 10 per cent of the income from dividend income for the reason that the same was incurred by the assessee for earning ..... X X X X Extracts X X X X X X X X Extracts X X X X
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