9911796707
TMI Blog2012 (12) TMI 813X X X X Extracts X X X X X X X X Extracts X X X X ..... xamining the records and going through the assessment order, he was of the opinion that the assessment order passed is erroneous and prejudicial to the interests of revenue on the following issues. 1) As per Annexure-II, depreciation allowable u/s IT Act for the year ended 31-3- 2004 the assessee claimed/was allowed depreciation of Rs.7,57,19,358/- including additional depreciation on Plant and Machinery expansion as the asset was put to use for less than 180 days. However, to claim additional depreciation the assessee is required to furnish certificate from an Accountant in Form 3AA u/s 32(1)(iia) of the Act, duly stating that the increase was not less than 25% of the installed capacity (i.e. by way of expansion) which was not furnished by the assessee. Hence, in the absence of the same, the claim of additional depreciation needs to be disallowed. The excess claim/allowance of depreciation works out to Rs.2,83,94,760/-. 2. The service charges received as per TDS certificates were Rs.59,16,285/- whereas the assessee had admitted Rs.55,32,097/- only. The difference of Rs.3,84,188/- has to be brought to tax. 3. The assessee had admitted an amount of Rs.29,07,68,449/- as export tur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l export turnover of Rs.35,88,84,142/-. However, the AO while passing the order u/s 143(3) of the Act did not exclude the said ocean freight and computed the deduction u/s 80HHC. Since the assessee did not offer any explanation in this regard, the CIT directed the AO to recomputed the deduction u/s 80HHC after excluding the ocean freight of Rs.6,18,29,151/-. Regarding fourth issue relating to excise duty payable on finished goods of Rs.30,02,950/- to the closing stock, the CIT held that the assessee is to prepare Profit & Loss A/c as per section 145A which requires that the assessee should take the value of excess component in the finished goods of closing stock. The assessee has not taken excise duty component in the closing stock, the CIT directed the AO to add excise duty payable on finished goods of Rs.30,02,950/- to the income assessed. 3. The assessee being aggrieved of the order passed u/s 263 of the IT Act by the CIT, has challenged the same by raising 5 grounds before us. 4. Ground No.1 with sub-grounds a,b and c relates to the disallowance of additional depreciation at Rs.2,83,94,760/-. The learned AR drawing our attention to pages 1 to 17 of the paper book submitted b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee prays that the order of the CIT on this issue may be quashed." 5. The learned DR referring to written submissions filed on behalf of the department on 10-9-2009 seriously disputed the filing of report in Form No.3AA and submitted that the receipt at page-1 of the paper book evidencing submission of Form No.3AA is a manipulated one with the intention of creating evidence. Referring to the letter of the respondent Commissioner, the learned DR submitted that the assessee be directed to produce the original of the letter appearing at page-1 of the paper book and requested for a direction to be given to the appropriate authority for verification of the same to find out as to whether the document produced by the assessee is indeed a genuine one or forged one. 6. We have heard rival contentions on the issue and perused the material on record. We find that the CIT has disallowed the claim of addl. Depreciation on the ground that the assessee having not fulfilled the mandatory requirements of section 32(1)(iia) by filing a report of the accountant in Form No.3AA before completion of the assessment proceedings. Whereas the learned AR of the assessee referring to a letter dated 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otal income already assessed. 3.2 In this connection the assessee submits that it earned service charges of Rs.55,32,097/- from M/s Regma Ceramics, Hyderabad and the said company had added service charges and made TDS on the total amount of Rs.59,16,285/- at 20.50% which amounted to Rs.12,12,328/-. The details of service charges as recorded in the published accounts, he details of service tax of Rs.3,84,188/- paid as per Annexure IV (item 21(1) of report in Form 3CD and also details of TDS of Rs.12,12,839/- are submitted herewith. In the light of these submissions, the CIT was not correct in directing the AO to add the amount of Rs.3,84,188. The assessee prays that the order of the CIT on this issue may be quashed." 9. The learned DR, on the other hand, contended that the assessee having not furnished any explanation before the CIT, the direction for addition is justified. 10. We have heard rival contentions and perused the material on record. It is seen from the final accounts of the assessee which has been submitted before us that in Schedule XII, the assessee had shown royalty and service charges at Rs.55.32 lakhs and the assessee has paid an amount of Rs.3,83,158 towards ser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter of appeal, it is prayed that the ITAT may hold that the CIT is not justified in revising the assessment on the issue of exclusion of ocean freight from export turnover." 12. We have heard rival contentions and perused the material on record. It is seen from the order passed by the CIT(A) at page-20 of the paper book that against the assessment order passed u/s 143(3) the assessee had preferred an appeal before the CIT (A) specifically raising the issue of claim of deduction u/s 80HHC relating to deduction of ocean freight of Rs. 6,18,29,151/- The CIT (A) while disposing of the appeal in his order dated 30-4-2007 has given the following direction:- "12. The AO noticed that while computing the total turnover of the purpose of deduction u/s 80HHC, the appellant has reduced ocean freight of Rs.6,18,29,151/- which was paid on import of raw materials. The AO held that the said freight is not deductible from the total turnover as the said turnover does not relate to the exports. 12.1. It appears that the character of the ocean freight has not been fully examined by the AO before deciding the issue. The AO is, therefore, directed to verify the claim of the appellant while computing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he finished goods have not been cleared from the factory. It is submitted that since excise duty payable is not debited to P&L account the same cannot be added to the value of finished goods. In this connection, the decision of Madras High Court in CIT vs English Electric co of India Ltd 243 ITR 512 Mad is relied on. The assessee also relies on the decision of Apex Court in the case of CIT vs. Indo Nippon Chemicals Co.Ltd 261 ITR 275 SC. and also on the decision in the case of ACIT vs. D&H Secheron Electrodes (p) Ltd 173 Taxman 188 MP. Following the Madhya Pradesh High Court decision, the ITAT, Hyderabad bench in ITA Nos.1173/H/2009 dated 31-1-2011 in the case of M/s. Suryavamshi spinning Mills Ltd, held in favour of the assessee on the issue of inclusion of excise duty on finished goods (Annexure-G). It is therefore submitted that there was no error in not including excise duty in the valuation of finished goods. It is therefore submitted that the C.I.T ought not to have directed the A.O to add excise duty payable on finished goods to the income assessed a.T1d pass orders accordingly. 5.3 Without prejudice to the above submissions, it is submitted that the assessee paid the excis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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