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TMI Blog2019 (5) TMI 540X X X X Extracts X X X X X X X X Extracts X X X X ..... uction of any article or thing. Considering relevant provisions of Section 32(1)(iia) which was prevailing at the relevant time, i.e. during the year under consideration, it cannot be said that the ITAT by applying the ratio of decision of VTM Ltd. [ 2009 (9) TMI 35 - MADRAS HIGH COURT] and Hi Tech Arai Ltd. [ 2009 (9) TMI 60 - MADRAS HIGH COURT] has committed any error in deleting the additionon account of disallowance of additional depreciation of Wind Electric Generator. Disallowance on account of unutilized CENVAT credit - appellant has been following exclusive method for accounting CENVAT as against inclusive method mandated under section 145A - HELD THAT:- T he identical issue has already been decided in the identical facts and circumstances of the case in the matter of CIT-vs-Bell Granito Ceramica Ltd. [ 2012 (6) TMI 879 - GUJARAT HIGH COURT] by the Hon ble Jurisdictional High Court in favour of the assessee as held under the scheme of the excise duty, the assessee incurs liability to pay excise duty only upon both the events taking place, namely manufacture of excisable goods and removal of excisable goods; excise duty is not therefore includible in the valuation of c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rcumstances of the case and in law, the CIT(A) ought to have upheld the order of the Assessing Officer to the extent' mentioned above since the assessee has failed to disclose his true income/book profit. The appellant prays that the order of CIT(A) on the above grounds be set aside and that of the Assessing Officer be restored to the above extent. The appellant craves, to leave, to amend or alter any ground or add a new ground which may be necessary. Ground No.1 3. This ground relates to the order passed by the Learned CIT(A) in deleting the disallowance made u/s 40(a)(i) in respect of consultancy and supervision charges of ₹ 71,43,952/- 4. The assessee filed its return of income on 26.09.2011 declaring total income of ₹ 2,35,39,500/- which was processed u/s 143(1) of the Act. Under scrutiny, notice dated 18.09.2012 u/s 143(2) was served upon the assessee on 22.09.2012 by the RPAD along with a questionnaire dated 28.11.2012 followed by a further notice u/s 143(2) r.w.s. 129 and 142(1) of the Act dated 02.05.2013 due to change of incumbent. Upon verification of the details during th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aragraph No. 14 of this order. Therefore respectfully following the same we do not find any reason to disturb the finding of the learned CIT-A. Hence the ground of Revenue s appeal is dismissed. We find no reason to deviate from decision taken by the Co-ordinate Bench as narrated above and respectfully relying upon the same we confirm the order passed by the authorities below. The revenue s appeal is found to be devoid of any merit and thus dismissed. Ground No.2 7. The second ground relates to deletion of disallowance of additional depreciation of ₹ 1,53,74,316/-. 8. The assessee-company had purchased plant and machinery of ₹ 153,743,158/- on which additional depreciation of ₹ 1,53,74,316/- (less than 180 days) has been claimed. The entire plant and machinery was on lease and accordingly rental income of ₹ 5,77,44,000/- was shown by the assessee. By and under a letter dated 26.12.2013, the assessee was directed to explain as to why said additional depreciation should not be disallowed. The issue was finalized by the Learned AO ultimately by disallowing the ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... epreciation. 23. The assets have been used in the business of leasing the assets of the assessee. Accordingly, the assessee is eligible for additional depreciation. 24. However, AO disregarded the contention of the assessee by holding that the assets were used in the business of leasing and not in the business of manufacture. Thus the assessee is not entitled to the additional depreciation. 24.1 Thus the AO after having a reliance on the judgment of Hon ble Gujrat high court in case of Bhagwati Appliances vs. ITO (337 ITR 286) added ₹ 85,75,341/- to the total income of the assessee. 25. Aggrieved assessee preferred an appeal to ld. CIT-A, who deleted the addition made by the AO following the co-ordinate bench order in the case of Heavy Metal and tubes Ltd in ITA no. 1951/A/2011. The ld. CIT-A also relied on the judgment of Hon ble Gujarat High court in the case of Diamines Chemicals Ltd reported 42 Taxman.com 193 where depreciation was allowed by holding that there is no requirement of correlation between the assets acquired and manufacturing activity. 26. The learned DR before us vehementl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ciation is that the setting up of new machinery or plant should have been acquired and installed by an assessee, who was already engaged in the business of manufacture or production of any article or thing. Considering the aforesaid facts and circumstances and considering the relevant provisions of Section 32(1)(iia) of the Income-tax Act, which was prevailing at the relevant time, i.e. during the year under consideration, it cannot be said that the ITAT by applying the ratio of decision of the Madras High Court in the case of VTM Ltd. (Supra) and in the case of Hi Tech Arai Ltd. (Supra) has committed any error in deleting the addition of ₹ 1,17,98,030/- on account of disallowance of additional depreciation of Wind Electric Generator. 3. We see no reason to interfere with the impugned judgment and order passed by the ITAT. No question of law, much less substantial question of law arises in the present Tax Appeal. Hence, the present Tax Appeal deserves to be dismissed and is accordingly dismissed. 27.3 We also find support and guidance from the order of this tribunal in the case of Heavy Metal and tubes Ltd (supra) wherein it was held as unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment proceeding on explanation of column No. 22(a) of 3CD Report, it revealed that the appellant shown unutilized CENVAT credit at the end of the year totaling to ₹ 23,64,484/-. If further revealed that the appellant has been following exclusive method for accounting CENVAT as against inclusive method mandated under section 145A of the Act, the specific quarry, therefore, was raised by the Learned AO. However, the explanation rendered by the assessee was not found suitable and Learned AO made addition of the said amount being utilized CENVAT to the total income of the assessee. During the appellate proceeding, the appellant submitted as follows before the first appellant authority: 6.2 Appellant during the course of appellate proceedings, contended as under: 3] The ld.AO was completely in error on facts and in law in making an impugned addition for the alleged unutilized Cenvat Credits of ₹ 23,64,484/- by not appreciating the submission made by the Appellant in reply dt.06.01.14 vide para-1 in right perspective which was although reproduced in the assessment order but however, the ld. AO completely failed to controvert / counter the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me of removal of goods: Party Account (Excise / service tax liability portion) Dr. - 23,61,721 To Sales Account 23,61,721 Booking of Output tax liability to respective payable account: Sales Account Dr.(Excise / service tax liability portion) - 23,61,721 To Cenvat payable Account - 23,61,721 Utilization of Cenvat receivable amount against output tax liability: Cenvat payable Account Dr. - 23,61,721 To Cenvat receivable Account - 23,61,721 Now, the accounting as drawn and explained above means that only the Cenvat credit (totaling to ₹ 47,26,205/-) which has actually been utilized to the extent for output tax liability (arising out of Sales to the tune of ₹ 23,61,721/-) and the remainder of Cenvat which has been actually availed but not utilized were shown as carried forward balance of Loans and Advances in the Balance Sheet as on 31/03/2011. Further, the Appellant would like to reiterate the fact that the provisions of Section 145A of the Income Tax Act, 1961 cannot be linked with the accounting precedence. Since, the Appellant has to draw your kind attention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at it is consistently following system of accounting adopted and accounting for the input credits - excise duty/service tax under exclusive method / net method . It is stated that the accounting policy adopted by the appellant is in line with the mandatory accounting standards prescribed under the Companies Act, 1956 and is being consistently followed from year to year. The credit so available is accounted for in the books which is debited when credit is available/availed of and credited when excise duty liability is paid off utilizing the balance available in this regard. On examination of profit and loss account it is found that the appellant has not claimed this expenditure in Profit and Loss account and therefore appellant has opted for exclusive method so to say purchase and sale are debited/credited without the amount of VAT. The result of which either debit or credit is considered as a balance sheet item. This method is consistently followed by the appellant this is admitted position of fact that the amount of VAT paid by appellant is not included in cost of purchase and the same was not debited in P L account. Further u/s 145A in determining the profit t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which duty of central excise can be levied and collected, the charge is not fastened in law and it cannot be stated that for the purpose of computing chargeable income such a charge gets fastened qua the finished goods appearing as part of closing stock. Further Hon'ble High Court elaborating that it would result into an anomalous situation under the two statutes, the Excise Act and the IT Act leading to contrary positions under both the statutes and in the facts of the present case, even on application of the general principles, the addition sought to be made by Revenue cannot be sustained. Further, it is held that making of an entry or absence of an entry cannot determine rights and liabilities of parties. In other words, Hon'ble High Court held that if the law does not lead to incurring of a liability, or does not lead to a corresponding right to insist for discharging such a liability any accounting practice (even if suggested by the ICAI) cannot lay down anything to the contrary. Hon'ble High Court has discussed the provisions of Section 145A which has been inserted by Finance (No.2) Act, 1998 w.e.f. 1 st April, 1999. Hon'ble High Court conside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n deleting the addition made on account of unutilized CENVAT credit of ₹ 7,18,178/-. 3. The CIT(A) has erred in law and in facts in deleting the disallowance of ₹ 1,38,489/- made u/s 14A r.w.r 8D of the Act. On the fact and in the circumstances of the case and in law, the CIT(A) ought to have upheld the order of the Assessing Officer to the extent' mentioned above since the assessee has failed to disclose his true income/book profit. The appellant prays that the order of CIT(A) on the above grounds be set aside and that of the Assessing Officer be restored to the above extent. The appellant craves, to leave, to amend or alter any ground or add a new ground which may be necessary. Ground No.1 16. This ground of appeal relates to the order passed by the Learned CIT(A) in deleting the disallowance u/s 40(a)(ia) in respect of consultancy and supervision charges of ₹ 81,55,045/-. 17. The issue involved in this ground of appeal is identical to that of the issue already been dealt with by us in ITA No.1247/Ahd/2016 for A.Y. 2011- 12 and in the absence of any change ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... med from any taxable source of income, there can be no question of disallowance of any expenditure. The disallowance therefore, has to be made for any expenditure which is claimed from taxable income but bears proximity with the investment etc., which would lead to the non-taxable income. Further that, the AO has been failed to consider that in terms of section 14A(2) condition precedent for him to determine amount of expenditure incurred in relation to exempt income is that he must record his dissatisfaction with correctness of claim of expenditure made by assessee or with correctness of claim made by assessee that no expenditure has been incurred. When no expense has been proved to be incurred, the disallowance as made by the Learned AO is uncalled for. He also relied upon the judgment passed by the Jurisdictional High Court on this issue in the matter of CIT-vs- Corrtech Energy Pvt. Ltd. reported in 372 ITR 92 (Guj) in support of his argument. On the contrary the Learned DR relied upon the order passed by the Learned AO. 23. We have heard the rival contentions made by the respective parties, perused the relevant materials available on record and also the judgment ..... X X X X Extracts X X X X X X X X Extracts X X X X
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