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TMI Blog2012 (8) TMI 557X X X X Extracts X X X X X X X X Extracts X X X X ..... not be allowed as revenue expenditure. More so, the assets were purchased in earlier year in respect of which 100% depreciation have been claimed and allowed to the assessee. The AO was of the opinion that there being no fresh addition by way of purchase of new asset the only increase/addition in the value is on the account of exchange fluctuation. Therefore on loan payment any extra liability is arisen, it cannot be added to the cost of asset because the extra expenditure would be considered on capital account of loan. This extra expenditure cannot be added to the cost of asset because this asset does not exist in Block of asset this year as it has already been written off in earlier year. 4. The matter was agitated before the Ld. CIT(A) but without any success. 5. The Ld. CIT(A) followed the appellate order for assessment year 2000- 01. Before us, the Ld. Senior Counsel submitted that similar issue travelled upto ITAT in the assessment year 2000-01 in assessee's own case in ITA No. 5569/Del/2003 wherein the Tribunal has allowed the claim of the assessee u/s. 43A of the Act. 6. The Ld. Departmental Representative relied upon the orders of lower authorities. 7. We have perused ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtunity of being heard to the assessee. The Ld. Counsel contended that for the year under consideration, the AO himself , at page-1 clause (iii) of assessment order has given a categorical finding that the assessee company has started its commercial production and therefore now it has been accepted by the department that the assessee had started commercial production, the claim should be allowed as per the findings of the Tribunal in the immediately preceding assessment year. 12. The Ld. Departmental Representative relied upon the order of lower authorities. 13. We have considered the rival submissions and perused the orders of lower authorities and the order of Tribunal in ITA No. 5569/Del/03. We may agree with the submissions of the Counsel that in the immediately preceding assessment year, the Tribunal restored the matter back to the file of Ld. CIT(A) because no material was brought on record to show that the assessee had started commercial production but for the year under consideration the AO has himself given a categorical findings in relation to the commercial activities of the assessee as pointed out herein above. But we find that starting of the commercial produ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ower were beneficially held by person who beneficially held shares of the company carrying not less than 51% of the voting power on the last date of the year or years in which loss was incurred. However , in the case of the assessee company more than 51% have been unconditionally allotted to Tata Power Co. Ltd. From Tata Industries Ltd, the company in which public are substantially interested therefore according to the assessee the facts of the case were covered by provisions of Sec. 2(18)(b)(B)(c) and therefore provisions of Sec. 79 will not be applicable. However, this contention of the assessee did not find favour with Ld. CIT(A) who rejected the claim of the assessee that it is a deemed public company and therefore it false within the meaning of Sec. 2(18)(b)(B)(c). The Ld. CIT(A) further observed that since the voting power is on the last day of the year to which losses pertains and the year in which claim of carry forward and set off of losses has been made has changed more than 51%, the assessee will not be entitled for benefit of carry forward and set off of losses and confirmed the addition made by AO. 18. The Ld. Sr. Counsel pointed out that the provisions of Sec. 79 are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Tata Industries Ltd. have been transferred to Tata Power Co. Ltd. It is worthwhile to note that both the companies i.e. Tata Industries Ltd. and Tata Power Co. Ltd. are companies in which public are substantially interested as both the company's shares are traded in the stock market. After considering this, we find force in the contention of the Ld. Counsel that the facts of the case are covered by provisions of Sec. 2(18)(b)(B)(c) and therefore the claim of set off of brought forward losses are not hit by provisions of Sec. 79. The reliance on the decision of Meredith Traders (P) Ltd. (supra) is well founded. The submissions of the Ld. DR who relied upon the finding of lower authorities are therefore rejected. The AO is directed to allow the claim of brought forward business losses. Ground No. 5 with all its sub grounds are therefore allowed. 22. Ground No. 6 relates to the grievance against the order of Ld. CIT(A) who confirmed the order of the AO in computation of Book Profit of Rs. 16,45,76,748/- for the purpose of Sec. 115JB of the Act. 23. While examining the return of income for the year under consideration, the AO found that the assessee company has earned adjusted bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... talized under the head 'Producing Properties' and a proportion of the same is being charged to P&L account under the head 'Depletion of Producing Properties' However total expenditure incurred for the above had already been charged to revenue for the purpose of Income tax Computation . Therefore expenses debited to P&L account under the head 'Depletion of Producing properties' have been added back for income tax computation and the actual expenditure incurred in the current year on development costs have been charged as expense." 26. As per the provisions of Sec. 115JB of the Act, the assessee company required to tax on the Book Profit after taking credit of brought forward business loss or unabsorbed depreciation whichever is less as per books of account. Further as per the provisions of said section every assessee being a company has to prepare profit and loss account for the relevant previous year in accordance with the provisions of Part II and III of Schedule VI to the Companies Act, 1956. We find that depreciation have not been defined under the Income Tax Act therefore we take guidance from the Notes of Accounting standard issued by Institute of Chartered Accountants of I ..... X X X X Extracts X X X X X X X X Extracts X X X X
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