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TMI Blog2011 (5) TMI 272X X X X Extracts X X X X X X X X Extracts X X X X ..... odvat utilised; 2. The appellant prays that the AO be directed to give correct effect to the CIT(A)'s order and grant legitimate deduction on account of Modvat" 3. At the time of hearing, the learned counsel for the assessee vide his letter dated May 23, 2011 submits as under: "......This appeal has been filed against the order passed by the Assessing Officer under section 143(3) r.w. section 250 of the Income Tax Act, 1961. The appellant, being aggrieved by the action of the Assessing Officer in not giving proper effect to the order of the Commissioner of Income Tax (Appeals) filed this appeal. The appellant had also filed appeal to the Hon'ble Tribunal against the order of the Learned CIT(A) for partly confirming the action of the AO by directing the AO to workout the modvat credit in accordance with the directions given in the order. Against the said appeal, the Hon'ble Tribunal, vide order dated April 20,2011 (ITA No.1071-5569/M/2007) has modified the direction of the CIT(A) and has sent back the matter to the file of the AO for fresh adjudication based on modified directions (See para 2.5-2.5.1, Page 6-7 of the ITAT order enclosed). &nbs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to use the same and expenses were of capital in nature. He therefore disallowed Rs.80,78,000/- (i.e. Rs.92,32,000 - depreciation for half of the year). On appeal learned Commissioner of Income Tax (A) following the appellate orders for the A.Ys.2002-03 and 2003-04 confirmed the disallowance made by the AO. 11. At the time of hearing, the learned counsel for the assessee submits that this issue is covered in favour of the assessee by the order of the Tribunal in M/s Godfrey Philips India Limited V/s Assistant Commissioner of Income Tax and vice-versa in ITA No.2792/M/06 and ITA No.2632/M/06 for the Assessment Year 2002-03, (Page 1-3, Para 2-5) (Quantum Appeal) and in ITA No.1071-5569-2632/M/2006 for Assessment Years 2003-04 and 2004-05 (page 2-3, para 2.1-2.2.1) (Quantum Appeal). 12. On the other hand, the learned DR supports the order of the AO and learned Commissioner of Income Tax (A). 13. We have heard both the parties, perused the records and considered the matter carefully. We find that the same issue has already been considered by the Tribunal in assessee's own case for the assessment years 2003-04 and 2004-05 (supra) wherein it has been observed in pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned counsel for the assessee that this issue is also covered in favour of the assessee by the decision of the Tribunal in assessee's own case. In the recent order for the assessment years 2003-04 and 2004-05 dated 20.4.2011, the Tribunal observed and held that in the assessment year 2002-03 the same issue of allowability of depreciation at higher rate in case of UPS has been raised. The Tribunal noted that in the Appendix to the Income-tax Rules 1962 "Automatic voltage controller" had been listed under the heading "Energy Saving Devices" as an electrical instrument eligible for 100% depreciation. Therefore the issue was whether UPS could be considered as automatic voltage controller. The Tribunal noted that UPS automatically corrected low and high voltage conditions and stepped up low voltage to safe output levels. The Tribunal therefore held that UPS was doing the job of voltage controlling automatically. For the said proposition the Tribunal also placed reliance on the order of the Jaipur bench of Tribunal in case of DCIT vs Service Finishing Equipment (2 SOT 232). The Tribunal accordingly allowed the claim of the assessee. The facts for the year under consideration are identical ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee. Facts this year are identical. We therefore restore this issue to the file of AO for fresh order after necessary examination in the light of observations made above and after allowing opportunity of hearing to the assessee. 2.4.1 We have heard both the parties perused the records and considered the matter carefully. The issue regarding allowability of the expenses on acquisition of computer software has already been restored by the in the earlier year to the file of AO for taking a fresh decision after necessary examination in the light of decision of the special bench in case of DCIT vs Amway India Enterprises (supra). In these years also we are restoring this issue to the file of AO. In case on fresh examination the AO finds that the software expenses are capital in nature, these expenses would have to be capitalized and the assessee will be entitled to depreciation as per rules even in respect of such expenses capitalized in earlier years. The AO is directed to act accordingly." In the absence of any distinguishing feature brought on record by the parties, we respectfully following the order of the Tribunal restore the issue to the file of the AO to exam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as been considered by the Tribunal in the assessee's own case for the assessment years 2003-04 and 2004-05 wherein the Tribunal observed in paragraph 2.5.1 of its order dated 20.4.2011 that in A.Y.2002-03 in ITA No.2792/M/2006, the Tribunal noted that in A.Y.2000-01 the same issue has been remitted back to the AO for fresh consideration in the light of decision of Hon'ble High Court of Delhi in case of CIT vs Mahavir Aluminum Ltd. (297 ITR 277). The Tribunal accordingly restored the issue to the file of AO. The facts are identical in the year under consideration. We, therefore, respectfully following consistent view of the Tribunal in assessee's own case (supra) set aside the order of learned Commissioner of Income Tax (A) and restore the issue to the file of AO for fresh order after necessary examination in the light of observations made above and after allowing opportunity of hearing to the assessee. The ground taken by the assessee is therefore partly allowed for statistical purposes. 28. Ground No.VI is against the sustenance of disallowance interest under section 36(1)(iii) of the Act. 29. The AO during the assessment proceedings noted that though the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee's own case on the similar facts has observed and held as under: "2.6.4 We have carefully considered the various aspects of the matter. We find substance in the submission of the assessee that no disallowance could be made in respect of the opening balances of loans and advances which were coming from earlier years and in which there were no disallowance. The plea of the assessee is supported by the judgment of Hon'ble High Court of Karnataka in case of Sridev Enterprises (supra) in which it was held that in case loans and advances were being carried forward from earlier years in which there was no disallowance, no disallowance could be made in respect of the opening balance in the current year as the nature and status of the advances on the first day of the current year remained the same as the nature and status of the advances on the last day of preceding year. In the earlier year there were no disallowances which meant that the revenue was satisfied that loans and advances were give from own funds. Therefore respectfully following the judgment of Hon'ble High Court of Karnataka in case of Sridev Enterprises (supra) we hold that no disallowance of interest will be m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on record by the Revenue, we respectfully following the order of the Tribunal (supra) set aside the issue to the file of the AO to examine the same afresh in the light of the directions given by the Tribunal (supra) and according to law after providing reasonable opportunity of being heard to the assessee. The ground taken by the assessee is, therefore, partly allowed for statistical purposes. 33. Ground No.VII is against the sustenance of disallowance under section 14A of the Act. 34. At the time of hearing, the learned counsel for the assessee submits that due to smallness of the amount he does not want to press above ground which was not objected to by the learned D.R. 35. That being so and in the absence of any supporting material placed on record, the ground raised by the assessee, is, therefore rejected being not pressed. 36. Ground No.VIII is against the sustenance of addition of leave encashment of Rs.34,03,000/- 37. The AO noted that the assessee had been claiming expenses on account of leave encashment on the basis of actuarial valuation report but from A.Y.2003-04 the assessee started claiming deduction on the actual payment basis. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich cannot be sustained. Only the payment which had actually been allowed earlier can be disallowed. In our view matters require fresh examination and disallowance has to be restricted to the amounts allowed in the earlier year. We therefore set aside the order of learned Commissioner of Income Tax (A) and restore the issue to the file of AO for passing a fresh order after necessary examination and after allowing opportunity of hearing to the assessee."
In the absence of any distinguishing feature brought on record by the learned counsel for the assessee, we respectfully following the order of the Tribunal (supra) restore this issue to the file of the AO to examine the matter afresh in the light of the directions of the Tribunal (supra) and according to law after providing reasonable opportunity of being heard to the assessee. The ground taken by the assessee is therefore partly allowed for statistical purposes.
41. In the result, the assessee's appeal for the assessment years 2004-05 stands dismissed and the appeal for the assessment year 2005-06 is partly allowed for statistical purposes.
Order pronounced in the open court on 31.5.2011. X X X X Extracts X X X X X X X X Extracts X X X X
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