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TMI Blog2016 (3) TMI 120X X X X Extracts X X X X X X X X Extracts X X X X ..... of a block of assets. Before us, Revenue has not brought any contrary binding decision in its support nor has pointed out as to why the ratio of the decision rendered by Hon’ble Gujarat High Court in the case of Banco Products (supra) would not be applicable to the present facts of the case. In such a situation, we are of the view that the ground of assessee deserved to be allowed in favour of assessee. Adjustment of bad and doubtful debts for computing book profit u/s.115JB - Held that:- Assessing Officer was not justified in adding the provision for bad and doubtful debts to the net profits for the purpose of Section 115JB. We thus set aside the addition made by Assessing Officer - Decided in favour of assessee Disallowance u/s deduction u/s.80IA - Held that:- We find that Assessing Officer has summarily dismissed the claim of assessee whereas it is assessee’s contention that it is eligible for claim of deduction u/s.80IA(4). After placing reliance on the aforesaid decision in case of CIT vs. Mitesh Impex reported in (2014 (4) TMI 484 - GUJARAT HIGH COURT ) in the present facts of the case, we are of the view that in the interest of justice, the ground needs to be restored ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h were later concised and the concised grounds read as under: 1. General 2. Ld. CIT (A) erred in law and on fuels in holding the reopening of assessment made by AO u/s 147 of the Act as valid. Ld. CIT (A) ought to have appreciated that reason recorded by AO does not directly refer to escapement of income. 2.1 Ld. CIT (A) erred in law and on facts in confirming action of AO in rejecting appellant's contention that assessment was reopened on basis of audit objections raised by Revenue Audit Party. 2.2 Ld. CIT (A) erred in law and on facts in confirming disallowance of depreciation made by AO of ₹ 18,19,520/- by reducing amount of subsidy, not received from any authority during the year under appeal. Ld. CIT (A) ought to have held that reopening of assessment is void and thereby deleted the addition made by AO. It be so held now. 3. Ld. CIT (A) erred in law and on facts in confirming action of AO of adding back bad and doubtful debts of ₹ 34,96,231/- for computing book profit at ₹ 33,84,878/- u/s 115JB of the Act, by applying explanation 3 to section 147 explanation 1 (i) to section 115JB of the Act, when both the provisions did not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e acquired in earlier years, is to be determined in each A.Y. and that the A.O. has to ensure that the depreciation allowed is not more than the actual cost. In the instant case, it is not the claim of the appellant that in the earlier years, depreciation was allowed after deducting the subsidy received. Therefore, A.O. s action in reducing the subsidy from cost and disallowing depreciation is upheld. These grounds of appeal are dismissed. 5.3 Aggrieved by the order of ld.CIT(A), Assessee is now in appeal before us. 5.4 Before us, ld. A.R. reiterated the submissions made before the Assessing Officer and ld. CIT(A) and further submitted that impugned subsidy was not received in the year under consideration but was received in A.Y.2000-01 and prior to A.Y. 2000-01 and that no subsidy was received subsequent to A.Y. 2000-01. He further submitted that the opening balance of the block of assets under the head Effluent Treatment Plant amounting to ₹ 6,36,233/- relates to the assets acquired in A.Y. 2003-04 and that no subsidy was received in A.Y.2003-04. He further submitted that on effluent treatment plants that were acquired in A.Y. 1999-2000 and 2000-01, depreciation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wn value of the block of assets by the amount of subsidy received in relation to some of the assets forming part of the block of assets and therefore, the cost of assets cannot be reduced out of the written down value and for this proposition he placed reliance on the decision of Hon ble Gujarat High Court in case of Banco Products (India) Ltd. vs. DCIT in Tax Appeal No.255 of 2007, order dated 05.10.2015. He also placed on record the copy of the aforesaid decision at page nos. 17 to 32 of the paper book. He further submitted that reliance placed by the Revenue in case of Saharanpur Electric Supply Co. Ltd. vs. CIT (1992) 194 ITR 294 is misplaced in view of the fact, in that case, the matter was with respect to the provision of depreciation when the block of assets method not in statute. He thus submitted that the Assessing Officer was in error in reducing the subsidy for the purpose of computing depreciation and in such a situation, he submitted that assessee s ground deserves to be allowed. Ld. D.R. on the other hand relied upon the order of A.O. 5.5 We have heard the rival submissions and perused the material on record. The issue in the present case is with respect to reducin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tral Government or a State Government or any authority established under any law or by any person, in the form of a subsidy, then, so much of the cost as is relatable to such subsidy, shall not be included in the actual cost of the asset to the assessee. A plain reading of section 43 (1) of the Act, shows that, ordinarily, when any subsidy is received qua an asset, it would not be included in the actual cost of the asset to the assessee. ln other words, the cost of the asset in the hands of the assessee would stand reduced to the extent of subsidy received by the assessee for the purchase of such asset. However, in the present case, the assessee created total facility by constructing building and installing various machineries in 1993-94, Thus, the actual cost of the assets in respect of which subsidy has been granted, came to be determined at the relevant time. Thereafter, the assets entered the block of assets and lost their independent identity and the cost of such assets merged with the other assets in the block. At the time when the actual cost of the assets came to be computed under section 43(1) of the Act, Explanation 10 was not on the statute book and therefore, the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of section 43 of the Act cannot be made applicable to assets of which the actual cost has been determined much before the insertion thereof and which also form part of a block of assets. Therefore, when it is not possible to apply Explanation 10 of section 43(1) of the Act, in relation to an asset which has entered into the block much before the insertion thereof, it must be regarded as never having been intended by the legislature to apply to assets forming part of a block of assets which have entered the block much before the insertion of Explanation 10 to subsection (1) of section 43 of the Act. We thus find that Hon ble Gujarat High Court in the decision cited hereinaove has held that in terms of Section 43(6)(c) of the Act, the WDV of an asset can be computed only in the manner provided thereunder namely by adding the actual cost of any asset falling within that block acquired during the previous year or by deducting the money payable in respect of any asset within the block, which is sold, discarded or demolished or destroyed during the previous year together with the amount of scrap value. It has further held that the statute does not contemplate any other category fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has to fail. 5.2.1. The next contention of the appellant is that as on the date of passing of assessment order Expln. 1 (i) below Sec. 115JB was riot on the statute and therefore the provision for bad and doubtful debts of ₹ 34,96,231/- should not have been added bock for computing book-profits. It is seen that the said amount was added back by the A.0. on the ground that it was not an ascertained liability. Besides the above mentioned Expln.1(i) was inserted by Finance (No.2) Act, 2009 w.r.e.f. 1.4.2001. In view of this A. O's action is perfectly in tune with law. Therefore [his contention of the appellant also fails. 5.2.2. Accordingly A.O's action in adding back the provision is upheld. These grounds of appeal are dismissed. 6.3 Aggrieved by the order of CIT(A), assessee is now in appeal before us. 6.4 Before us, ld. A.R. reiterated the submissions made before the Assessing Officer and ld. CIT(A) and further submitted that on identical facts in the case of ACIT vs. Vodafone Essar Gujarat Ltd. in ITA No.1999/Ahd/2008 order dated 11.05.2012, the Co-ordinate Bench of Tribunal has held that bad and doubtful debts cannot be termed as the provision f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . In order to attract the Explanation the debt which is doubtful or bad should satisfy the requirement contemplated in Item (c) of the Explanation. It is the amount or amounts set aside as provisions made for meeting the liability other than the ascertained liabilities. In the instant case also the bad and doubtful debt for which a provision is made which is in the nature of diminution in the value of any asset would not fall within item (c) of Explanation(i), It is in the context the appellate Commissioner as well as the Tribunal has granted relief to the assesses. Realising the fatality of the said argument, it is contended now that item (i) cannot amount to satisfaction as provision for diminishing in the value of assets is substituted, in case of the assessee falls under Item (c). In meeting the aforesaid case, the Ld. counsel for the assessee brought to our notice the judgment of the Apex Court in the case of Vijaya Bank (supra) where the Apex Court had an occasion to consider his explanation. It accepted the argument on behalf of the Revenue to the effect that the explanation makes it very clear that there is a dichotomy between actual write off on the one hand and provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the Profit and loss account for the year ended 31st March 2003. In the Balance sheet as on 31st March 20023 of the assessee, it can be seen that the provision of bad and doubtful debts has been reduced from the gross debtors and the net sundry debtors are shown as asset in the balance sheet. Thus the provision for bad and doubtful debts cannot be termed as a provision for liability but is in the nature of diminution in the value of asset. In view of the aforesaid facts, we are of the view that the facts in the present case are identical to that of the case of Yokogwa India Ltd (supra). We therefore, respectfully following the decision of Hon'ble High Court in the case of CIT vs. Yokogwa India Ltd., (supra) we do not find any infirmity in the order of CIT(A). Accordingly the appeal of the Revenue is dismissed. Before us, Revenue has not pointed out any contrary binding decision in its support nor has not pointed any distinguishing feature in the facts of the present case to that of ACIT vs. Vodafone Essar Gujarat Ltd. (supra). We, therefore, respectfully following the order of Co-ordinate Bench in above case, are of the view that Assessing Officer was not justified in a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned AO ought to have adopted the WDV of the depreciable assets on the basis of the assessment order for A.Y. 2004-05. 5. The learned CIT (A) grossly erred in law and on facts of the case In confirming the action of the AO in disallowing the assessee's claim for depreciation by capriciously deducting an amount of ₹ 8,04,93,623/-being contributions received from the members in earlier years prior to the assessment year under appeal in utter disregard to the fact that the contribution received from the members are required to be adjusted towards the cost of land as well as plant machinery. 6. The learned CIT (A) is in gross error in confirming the action of the AO in deducting the amount of ₹ 8,04,93,623/- being contribution received from the members in earlier years only from the WDV of the depreciable assets without apportioning to the cost of land. 7. The learned CIT (A) grossly erred in law and on facts of the case in not specifically adjudicating the 7th ground of appeal taken before him which reads as under: Without prejudice to the above ground, if at all the amount of contribution received from the members were to be reduced from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o that of ground no2.2 for A.Y. 2004-05 which has been decided hereinabove by us. We therefore for similar reasons stated hereinabove while deciding the issue for A.Y. 2004-05 allow the present ground of assessee. Thus, this ground of Assessee is allowed. 12. Ground no.9 is with respect to not allowing deduction u/s.80IA of the Act. 12.1 Assessing Officer noticed that in the statement of income that was filed by the assessee that a mention was made that the assessee that it is entitled to exemption u/s.80IA but since, there was a loss, the same was not claimed in the current year. Assessing Officer was of the view that for claiming exemption u/s.80IA, assessee is required to fulfill the conditions laid down u/s.80IA(4) of the Act and just by mentioning about its eligibility, does not prove the fulfillment of the necessary conditions for being eligible for deduction. He accordingly denied the claim of deduction. Aggrieved by the order of Assessing Officer, Assessee carried the matter before the ld. CIT(A) who upheld the order of Assessing Officer by holding as under: 5.2 I have carefully considered the rival submissions. I have also perused various cases relied upon by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claim cannot be shut out for all times to come, merely because it is raised for the first time before the appellate authority without resorting to revising the return before the Assessing Officer. The relevant finding of Hon ble Gujarat High Court reads as under: 38. It thus becomes clear that the decision of the Supreme Court in the case of Goetze (India) Ltd (supra) is confined to the powers of the assessing officer and accepting a claim without revised return. This is what Supreme Court observed in the said judgment while distinguishing the judgment in the case of National Thermal Power Co. Ltd-(supra) and that is how various High Courts have viewed the dictum of the decision in the case of Goetze (India) Ltd.(supra). When it comes to the power of Appellate Commissioner or the Tribunal, the Courts have recognized their jurisdiction to entertain a new ground or a legal contention. A ground would have a reference to an argument touching a question of fact or a question of law or mixed question of law or facts. A legal contention would ordinarily be a pure question of law without raising any dispute about the facts. Not only such additional ground or contention, the Courts hav ..... X X X X Extracts X X X X X X X X Extracts X X X X
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