9911796707
TMI Blog2019 (9) TMI 301X X X X Extracts X X X X X X X X Extracts X X X X ..... y the revenue authorities is misplaced because in that case the assessee had specifically stated that he is unable to furnish inventories in respect of plant and machinery and furniture and fixtures declared at the time of search action u/s 132 of the Act. Whereas, the facts of the case in hand show that the inventories of plant and machinery have been prepared by the Income tax department itself and has accepted the surrendered amount of ₹ 3.50 crores- the assessee has satisfactorily established its claim of depreciation Additional income disclosed over a period of six years on account of capital expenditure debited to the repairs and maintenance - no error or infirmity in the directions of the CIT(A). We, accordingly direct the Assessing Officer to compute the depreciation as per the rates applicable on the WDV of the block of assets as directed by the CIT(A). Ground No. 2 is, accordingly, allowed. Low tax effect - Monetary limit - retrospective effect of the CBDT circular - HELD THAT:- Tax effect involves in the appeal of the Revenue is below ₹ 50 lakhs. Circular No. 17/2019 dated 08/08/2019 will apply to all pending appeals. Therefore the precedent, it i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8th August 2019 Subject: - Further Enhancement of Monetary limits for filing of appeals by the Department before Income Tax Appellate Tribunal, High Courts and SLPs/appeals before Supreme Court - Amendment to Circular 3 of 2018 - Measures for reducing litigation.- Reference is invited to the Circular No.3 of2018 dated 11.07.2018 (the Circular) of Central Board of Direct Taxes (the Board) and its amendment dated 20th August. 2018 vide which monetary limits for filing of income tax appeals by the Department before Income Tax Appellate Tribunal. High Courts and SLPs/appeals before Supreme Court have been specified. Representation has also been received that an anomaly in the said circular at para 5 may be removed. 2. As a step towards further management of litigation. it has been decided by the Board that monetary limits for filing of appeals in income-tax cases be enhanced further through amendment in Para 3 of the Circular mentioned above and accordingly, the table for monetary limits specified in Para 3 of the Circular shall read as follows: S.No. Appeals/SLPs in IT matters ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eferences to be filed henceforth in Hon'ble Supreme Court/Tribunal and it shall also apply retrospectively to pending SLPs/appeals/cross objections/references. Pending appeals below the specified tax limits in para 3 above may be withdrawn/not pressed. 7. In light of the above, we are of the considered opinion that Circular No. 17/2019 shall also apply retrospectively to pending appeals. In that view of the matter, the appeals filed by the Revenue stand dismissed. 8. Coming to the assessee s appeal in ITA No. 1195/DEL/2009 A.Y 2006-07 and cross objection in CO No. 70/DEL/2013 for A.Y 2007-08, facts are that during the assessment proceedings for A.Y 2006-07, the Assessing Officer found that the assessee has received pre-shipment advance against export order from M/s Cargill International Trading Pte Ltd [Singapore] on 09.12.2005. On 31.03.2006, a sum of ₹ 2,25,93,901/- has been credited by way of journal entry, being the amount of discount on funds received from M/s Cargill International Trading (I)(P) Ltd. 9. The assessee was asked to explain how the discount has been accounted for in the profit and loss account. The asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oned in the agreement is related to trade transaction mentioned in the agreement and gets crystallised only when trade transaction is completed and since the transaction was to be completed in the previous year relevant to A.Y 2007-08, liability on account of trade account got crystallised in A.Y 2007-08 only. Having stated all that, the Assessing Officer found that no actual sale has taken place and the contract of sale has not finally materialised and has been cancelled and, accordingly, proceeded to treat the trade discount in the nature of finance charges/interest payment and invoking the provisions of section 40(a)(ia) of the Act, the Assessing Officer treated the said claim devoid of any tax deducted at source and added the same to the income of the assessee. 14. The assessee carried the matter before the CIT(A) but without any success. 15. Before us, the ld. AR vehemently stated that liability arose pursuant to the agreement with M/s Cargill International Trading Pte Ltd and, therefore, invoking the provisions of section 40(a)(ia) of the Act is bad in law. It is the say of the ld. AR that it is incorrect to hold that cash discount is in the na ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re of the considered opinion that since the CIT(A) has allowed part of the said discount in A.Y 2007-08, the same should be allowed in full. We, accordingly, dismiss the claim in A.Y 2006-07 and allow the cross objection in A.Y 2007-08. The Assessing Officer is directed to allow the cash discount of ₹ 2,25,93,901/- in A.Y 2007- 08. Grounds Nos. 1 to 1.4 in ITA No. 1195/DEL/2009 are dismissed, while cross objection on this issue in CO No. 70/DEL/2013 is allowed. 22. Coming to Ground No. 2 in A.Y 2006-07, the grievance of the assessee is that the CIT(A) erred in confirming the action of the Assessing Officer by sustaining the disallowance of depreciation on plant and machinery purchased out of surrendered amount of ₹ 3.5 crores. 23. Facts on record show that while scrutinising the return of income, the Assessing Officer found that the assessee has claimed depreciation of ₹ 31,87,500/- is as under: A.Y Agro Profits Repairs to P M 2000-01 5,00,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch suggests that the plant and machinery worth ₹ 4.25 crores have been installed within short period between 17.01.2006 and 25.01.2006. 27. The Assessing Officer further observed that the assessee has not submitted any fixed assets register which it was required to maintain and failed to submit proof of purchase, installation and use of the plant and machineries. The Assessing Officer was of the firm belief that the claim of the assessee is not in accordance with law and hence liable to be rejected. Accordingly, the Assessing Officer disallowed claim of depreciation of ₹ 31,87,500/-. 28. The assessee carried the matter before the CIT(A) and once again explained the facts. 29. After considering the facts and detailed submissions, the ld. CIT(A) observed that in so far as the claim of deprecation on amount disclosed as additional income amounting to ₹ 75 lakhs, which was claimed as revenue expenditure in earlier A.Ys but were disallowed, now the same is treated as capital expenditure. The assessee is entitled for depreciation because the genuineness of the expenditure claimed as repair and maintenance were never doubte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respect of plant and machinery and furniture and fixtures declared at the time of search action u/s 132 of the Act. Whereas, the facts of the case in hand show that the inventories of plant and machinery have been prepared by the Income tax department itself and has accepted the surrendered amount of ₹ 3.50 crores. 35. Considering the facts in totality, we are of the considered opinion that the assessee has satisfactorily established its claim of depreciation on ₹ 3.50 crores. We, accordingly, direct the Assessing Officer to allow the claim of depreciation on plant and machinery of ₹ 3.50 crores. 36. In so far as the claim of depreciation of ₹ 75 lakhs is concerned, we do not find any error or infirmity in the directions of the CIT(A). We, accordingly direct the Assessing Officer to compute the depreciation as per the rates applicable on the WDV of the block of assets as directed by the CIT(A). Ground No. 2 is, accordingly, allowed. 37. In the result, the appeals filed by the Revenue in ITA Nos. 1291/DEL/2009 and 379/DEL/2012 stand dismissed. The appeal of the assessee in ITA No. 1195/DEL/2009 is partly allowe ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
