9911796707
TMI Blog2012 (12) TMI 810X X X X Extracts X X X X X X X X Extracts X X X X ..... 7-08. 2.1 The learned A.R of the assessee has submitted that the depreciation claimed by the assessee was on the assets other than the discarded assets and hence the factual position remains that the assessee had claimed depreciation on assets other than discarded assets and on which the depreciation has been allowed in the earlier years. The learned A.R. Has further submitted that the plant and machinery and factory building, as appearing in the accounts, are still in existence; therefore, these assets were not discarded or demolished; but no manufacturing activities were carried out. The learned A.R. has thus submitted that these assets form part of block of assets as given in the chart filed and available at page number 1 of the paper book. 2.2 In nutshell, the learned A.R of the assessee has submitted that this Tribunal has erred in dismissing the ground no. 2 on incorrect facts as both the assets, i.e. plant and machinery and factory building have not been discarded as incorrectly assumed by the Tribunal. 2.3 On the other hand, the learned DR has submitted that the assessee received the grant for discarding of the plant and machinery in question. Once the assessee has recei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... [In respect of depreciation of- (iii) in the case of any building, machinery, plant or furniture in respect of which depreciation is claimed and allowed under clause (i) and which is sold, discarded, demolished or destroyed in the previous year (other than the previous year in which it is first brought into use), the amount by which the moneys payable in respect of such building, machinery, plant or furniture, together with the amount of scrap value, if any, fall short of the written down value thereof : Provided that such deficiency is actually written off in the books of the assessee." 8.1 It is clear that the provisions of sec. 32(1)(iii) stipulate the depreciation in case of the assets which is sold, discarded, demolished or destroyed is the amount, which is different between the written down value of the asset and scrap value. 8.2 In the case in hand, the assessee has not claimed that the compensation received by the assessee in lieu of the discarded asset is short of its written down value; therefore, the claim of the assessee for depreciation on the written down value of the discarded assets is not permissible as per provisions of sec. 32 of the I T Act. 8.3 The decisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ectified u/s. 254(2). For exercising the jurisdiction u/s. 254(2), it is mandatory that a mistake should be wide apparent, manifest and patent and not a point which would involve serious circumstances of dispute of question of fact or law which requires investigation and verification of facts. Thus, a patent mistake which can be rectified u/s. 254(2) does not require an elaborate discussion of evidence or arguments. Sec. 254(2) does not confer power on the Tribunal to review earlier order by re-appreciating and re-evaluating the evidence and facts of the case. Therefore, in the garb of rectification of mistake, no order can be passed u/s. 254(2) which amounts to reversal of the order passed after discussing all facts and statutory provisions. 5 For the assessment year 2007-08 the assessee has also raised an grievance against the impugned order and submitted that the depreciation on these assets cannot be disallowed while computing book profit under section 115JB. The assessee has raised and reiterated the contentions as raised at the time of hearing of the appeals of the assessee. The Tribunal has given a detailed finding on the issue in para number 17 to 17.6 as under: "17 We ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Further, with the passage of time there is also diminution In the value of the said assets even though they are not used for the purpose of business of the assessee during the year and as such the said addition would also be covered by clause (i) inserted under Explanation -1 of section 115JB after the decision of the Hon'ble Apex court given in the case of Apollo Tyres Ltd. 255 ITR 273. Hence, the Assessing Officer was fully justified in adding back the depreciation claimed on the factory building and on plant & machinery. Accordingly, the contentions raised by the appellant in this regard are rejected." 17.1 Once the assessee closed the factory then the decision of the assessee to book the depreciation of dismantled assets has to be decided as per the provisions of companies Act as well as AS-6. The fundamental principle for providing deprecation on asset is diminution in the value of the assets due to wear and tear as a result of use or retain for business of the assessee. Thus, underline rule for depreciation is use or retain of assets for the purpose of the business of the assessee. When the asset has been discarded and dismantled, then in the absence of physical existence o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and loss account and laid before the company at its annual general meeting in accordance with the provisions of section 210 of the Companies Act, 1956 (1 of 1956) : Provided further that where the company has adopted or adopts the financial year under the Companies Act, 1956 (1 of 1956), which is different from the previous year under this Act,- (i) the accounting policies; (ii) the accounting standards adopted for preparing such accounts including profit and loss account; (iii) the method and rates adopted for calculating the depreciation, shall correspond to the accounting policies, accounting standards and the method and rates for calculating the depreciation which have been adopted for preparing such accounts including profit and loss account for such financial year or part of such financial year falling within the relevant previous year. 17.4 In comparison to sec. 115J where the requirement of preparation of the accounts was limited as to prepare in accordance with the provisions of Parts II & III of Schedule VI of the Companies Act, the requirement u/s 11JB is apart from preparation of accounts as per Part II & III of Schedule VI of the Companies Act also requires that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for preparation of profit and 1059 account laid before the Annual General Meeting. Except for the above two cases, the Assessing Officer has no power to alter the net profit shown L the companies for the purpose of computing the book profit. Thus, it is clear that under MAT, the Assessing Officer should take the net profit as computed by the assessee and then make the adjustments under section 11 5JB of the Act. It is common that some companies follow an accounting year under the Companies Act, 1956 which is different from the financial year under Income-tax Act, 1961. These companies generally prepare two sets of accounts - one for Companies Act and another for Income-tax Act. The reason being different accounting policies, standards, depreciation methods and rates are adopted in two sets of account so that higher profit is reported to shareholders and lower profit for the income-tax authorities. To curb the above practice only this recalculation of net profit under MAT was incorporated so that there should be a consistency in accounting policies, standards, methods and rates of depreciation within the knowledge of income-tax authorities." The decision of the Bombay High Court i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on'ble Supreme Court in the case of Apollo Tyres Ltd. (supra) as well as the decision of the Hon'ble jurisdictional High Court in the case of Akshay Textiles Trading & Agencies (P.) Ltd. reported in 304 ITR 401 & the decision of the Bombay High Court in the case of Veekaylal Investment Co. (P.) Ltd. reported in 249 ITR 597 has taken a view that the decision in the case of Veekaylal Investment Co. P. Ltd. [supra] has not been overruled by the decision in the case of Akshay Textile Trading & Agencies Pvt. [supra]. Accordingly, we do not find any error or illegality in the orders of the lower authorities on this issue." 6 In the Miscellaneous Applications as well as in the arguments advanced by the learned A.R during the hearing of the Miscellaneous Applications are same as raised at the time of hearing of appeals; therefore, in view of the settled proposition of law the Tribunal has no jurisdiction to re-appreciate the contentions as well as evidence in the proceedings under section 254(2). Once the finding has been given on merit than under the proceedings of 254 (2), the same cannot be reversed. 7 The assessee has also pointed out a typographical mistake in paragraph 10 of the im ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
