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TMI Blog2015 (9) TMI 892X X X X Extracts X X X X X X X X Extracts X X X X ..... nnot be denied in the subsequent assessment years on the written down value. The asset cannot be taken out of block of assets. Similar view has been taken by the Tribunal in the case of Kodak Polychrome Graphics (I) (P) Ltd. Vs. ACIT (2013 (9) TMI 481 - ITAT MUMBAI ). - Decided in favour of assessee. - ITA No. 360/PN/2014, ITA Nos. 564 & 565/PN/2014 - - - Dated:- 31-8-2015 - SHRI R.K. PANDA AND SHRI VIKAS AWASTHY, JJ. For The Assessee Shri J.G. Pendse For The Revenue Shri Rajesh Damor ORDER PER VIKAS AWASTHY, JM : These are set of three appeals. ITA No. 564/PN/2014 has been filed by the Revenue against the order of Commissioner of Income Tax (Appeals)-V, Pune dated 24-12-2013 for the assessment year 2005-06. In ITA No. 360/PN/2014, the assessee has impugned the order of Commissioner of Income Tax (Appeals)-V, Pune dated 24-12-2013 for assessment year 2007-08. The Revenue has filed cross appeal in ITA No. 565/PN/2014 against the order of Commissioner of Income Tax (Appeals) for the assessment year 2007-08. 2. The Revenue in both the appeals have assailed the orders of Commissioner of Income Tax (Appeals) for respective assessment years on one ground i.e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eal before the Tribunal. 4. Shri J.G. Pendse appearing on behalf of the assessee submitted at the outset, that the issue relating to eligibility of the assessee for claiming deduction u/s. 80IB on income from sale of scrap at Goa Unit, is squarely covered by the decision of Tribunal in assessee s own case in ITA No. 105/PN/2007 for the assessment year 2002-03. The Tribunal held that the assessee is eligible for claiming deduction u/s. 80IB. This view was subsequently followed by the Co-ordinate Bench of Tribunal in ITA No. 1975/PN/2013 for assessment year 2004-05. 5. Shri Rajesh Damor representing the department fairly admitted that this issue has been considered by the Tribunal in assessee s own case in assessment years 2002-03 and 2004-05. However, the ld. DR supported the findings of Assessing Officer on this issue. 6. We have heard the submissions made by the representatives of both the sides and have examined the orders of the authorities below. We have also perused the orders of Co-ordinate Bench of Tribunal in ITA No. 105/PN/2007 for assessment year 2002-03 decided on 15-07-2011 and ITA No. 1975/PN/2013 for assessment year 2004-05 decided on 29-09-2014. We find that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appeals of the Revenue. 8. Now, we will take up the appeal of assessee. The assessee in its appeal has impugned the findings of Commissioner of Income Tax (Appeals) in denying depreciation on intangible assets. The ld. AR submitted that the assessee has set up a plant for manufacturing of optic fiber cables. The assessee entered into a Long Term Purchase Agreement for procurement of raw material (Preforms) from Shin Etsu Chemical Company Limited, Japan. The said preforms are used in manufacturing process whereby fibre is drawn out of the said performs, which is then further used in manufacturing of optic fibre cables. The preform is the most crucial and critical raw material required for the manufacture of optic fibre cables. Shin Etsu is having more than 50% market share in the sale of preform, worldwide. Since, Shin Etsu had substantial control over the world market, it become the single source supplier of preform to the assessee. As per the long term supply agreement dated 07-12-2000, Shin Etsu would supply 400 kgs of preforms per month for a period of three years starting from October, 2001. Thereafter, another agreement dated 20-01-2001 was executed. According to the se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in the case of Kodak Polychrome Graphics (I) (P) Ltd. Vs. ACIT; 171 TTJ (Mumbai) 224. 9. The ld. DR controverting the submissions made on behalf of the assessee submitted that the entire transaction is a trading transaction. No capital asset had come into existence on which depreciation can be claimed. The assessee has made payment without actual delivery of the alleged capital asset. In fact, the payment made by the assessee is in the nature of speculative loss. As far as reassessment proceedings are concerned, they have nothing to do with the disallowance of depreciation on intangible asset. The ld. DR pointed out that a perusal of reassessment order would show that the assessee has already taken benefit of writing down of inventory. Allowing depreciation on the same would amount to double deduction. The ld. DR vehemently supported the findings of Commissioner of Income Tax (Appeals) and prayed for dismissing the appeal of the assessee. 10. Rebutting the submissions of ld. DR, the ld. AR of the assessee submitted that writing down of the inventory has nothing to do with the future price of the vital raw material. Capitalization of the lumpsum payment has been done for fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The assessee in the period relevant to assessment year 2004-05 had capitalized the amount of 285 million Japanese Yen and had claimed depreciation thereon year after year. This fact is evident from the balance sheet filed by the assessee for the financial year ending on 31-03-2004, 31-03-2005 and 31-03-2006. Once, it has become the part of block of asset on which the depreciation has been allowed for the three assessment years, the depreciation cannot be denied in the subsequent assessment years on the written down value. The asset cannot be taken out of block of assets. Similar view has been taken by the Tribunal in the case of Kodak Polychrome Graphics (I) (P) Ltd. Vs. ACIT (supra). The relevant extract of the findings of the Tribunal on the issue of disallowance of claim of depreciation is as under: 20. We have considered the rival contentions, perused the relevant findings of the Assessing Officer as well as the learned Commissioner (Appeals) and the material placed on record. It has not been disputed before us that the assets on which the depreciation has been claimed in this year are forming part of block of assets and the written down value on such assets is coming fr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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