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TMI Blog2010 (11) TMI 675X X X X Extracts X X X X X X X X Extracts X X X X ..... ,803/- as against Rs.86,22,69,449/- claimed by the appellant on WDV rates basis as per its claim in the earlier assessment year. The learned CIT(A) erred in confirming the same. It is submitted that it be so held now and the claim of depreciation on WDV rates as put up by the appellant on the basis of revised return filed for Assessment Year 2002-03 be allowed to the appellant." 3. We have heard both the parties and perused the material placed before us. We find that this issue to be squarely covered in favour of the assessee by the decision of the ITAT in assessee's own case for A.Y.2002-03 vide ITA No.1221/Ahd/2006 dated 3-3-2009 wherein the ITAT held as under: "16. As regards claim of depreciation of WDV basis as against claimed allowed as per SLM basis as per original return, ld.counsel for the assessee submitted that the assessee can alter the claim of depreciation by filing revised return. For these purposes reliance was placed on following decisions: (1) CIT vs. Arund Textile 'C', 192 ITR 700 (Guj); (2) CIT vs. Mahendra Mills, 243 ITR 56 (SC); (3) CIT vs. Sree Senhavalli Textiles P. Ltd., 259 ITR 77 (Mad); (4) BECO Engineering ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e revised return. The return filed under section 139(5) being a voluntary return is of the nature of a return under section 139(1), therefore, a second revised return can be filed under section 139(5) correcting omission and wrong statement made in the first revised return, for the first revised return filed under section 139(5), in law be a return under section 139(1) also. 17.1 The effect of all these decisions is that since the original return gets substituted by revised return and the revised return being considered as filed under section 139(1) of the Act, the opinion exercised in original return cannot be said to have been exercised at all. The option which can be said to be exercised is only in revised return as the original return is non est or is effaced. Hon'ble Supreme Court in the case of Delhi Cloth and General Company Ltd. vs. State of UP., 118 ITR 277 was considering a claim which was required to be considered as per the option which was required to be exercised by the assessee. Hon'ble Supreme Court observed as under: xxxxx From the aforesaid ruling of Hon'ble Supreme Court, it can be held that where the assessee is required to exercise an op ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n respect of purchase of power from GEB as prior year expenses and also Rs.15,00,058/- in respect of plant dedication ceremony expenses (which were capitalized in earlier assessment year and now came to be decapitalized following the objection from CandAG Audit) as prior year expenses." 8. The only ground raised in the Revenue's appeal is also similar to this ground of the assessee. Therefore, we shall consider the ground raised by the Revenue along with ground no.3 of the assessee's appeal. The ground raised in the Revenue's appeal reads as under: "1. The ld. CIT(A) has erred in law and on facts of the case in directing the AO to allow the prior period expenses of Rs.18,19,314/- as the same is not allowable as per accounting standards applicable to mercantile system of accounting." 9. The facts of the case are that for the year under consideration, the AO disallowed a sum of Rs.33,15,639/- being prior period expenditure. On appeal, the CIT(A) deleted the disallowance to the extent of Rs.13,19,314/- against which the Revenue is in appeal, while the CIT(A) confirmed the disallowance amounting to Rs.1,04,732/- and Rs.15,00,058/- against which the assessee is i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ttled during the year or were claimable on cash basis u/s 43B of the Act, even if they pertained to earlier years." The assessee's contention is considered and held as not tenable on legal and factual ground on various accounts. As admitted in Tax Audit Report, the assessee follows the mercantile system and these expenses were incurred in earlier years which is also mention in the 3CD report. The assessee's perception that these prior period expenditures have been crystallized or settled during the subsequent time period under consideration amounts to a subjective assessment towards actual occurrence of such transactions. This peculiar treatment is allowable only in the "cash system of accounting", whereas the assessee is consistently following "mercantile system of accounting". In this regard the Court has also opined that under the mercantile system, income and expenditure are recorded at the time of their occurrence during the relevant previous year. For instance, income accrued during the previous year is recorded whether it is received during the previous year or during a year preceding or following the previous year. Similarly expenditure is recorded if it is due duri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee's own case for A.Y.2003-2004 (supra) wherein the ITAT held as under: "46. We have heard the rival submissions and perused the orders of the lower authorities and the materials available on record. The Assessing Officer observed that the assessee had disputed bill of Rs.87,76,228/- and Rs.14,00,291/- received from GEB. He, therefore, disallowed deduction claimed in respect of the same. The ld. CIT(Appeals) observed that the assessee purchased Electricity from GEB. In respect of this, bill was raised GEB of Rs.87,76,228/- and Rs.14,00,291/-., The assessee finding that the rate per unit of Electricity charges in the bills were exorbitant, disputed its liability and the matter was referred to arbitration. Therefore, the ld. CIT(Appeals) deleted the disallowance in its entirety. We find that it is not a dispute that the Electricity was consumed by the assessee and therefore, the assessee was legally liable to pay to GEB in respect of such consumption. The mere fact that the assessee has disputed the bill amount does not empower the Assessing Office to disallow the claim in full. The dispute is in respect of quantum only and not in respect of actual use of Electricity for business pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... judicate the issue. 18. Ground No.4 of the assessee's appeal reads as under: "4. The ld. CIT(A) erred in law in dismissing the ground of the appellant to direct learned AO to quantity unabsorbed depreciation and carry forward of business loss in the event of the appellant succeeding in appeal before the ITAT in the assessment year 2002-03 and subsequent assessment years. It is submitted that it be so held now." 19. At the time of hearing before us, the learned counsel fairly stated that this issue is purely consequential and the only request made by the assessee in this ground of appeal is for the quantification of unabsorbed depreciation and carry forward loss in view of the decision of the ITAT for A.Y.2002-03. The request of the assessee is quite fair and reasonable. The AO is duty bound to give effect to the order of the ITAT of each year and thereafter work out, unabsorbed depreciation or the business loss, if any, and carry forward and set off against the business profit, if any of the subsequent year. We therefore direct the AO to act in accordance with law in this regard. 20. Ground No.5 is against charging of interest under Section 234B. At ..... X X X X Extracts X X X X X X X X Extracts X X X X
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