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TMI Blog2020 (4) TMI 740X X X X Extracts X X X X X X X X Extracts X X X X ..... the point recorded at the time of passing final order. We hold that the order of ld.CIT u/s.263 qua directing the ld.AO to pass a fresh order denovo on account of claim of depreciation on account of Foreign Exchange Fluctuation is bad in law and is thus not sustainable in Law. Therefore, that portion of the order is quashed, and this ground raised by the assessee is allowed. Disallowance on account of repairs to Plant Machinery - HELD THAT:- It is not a proviso to proviso in other words. Learned Departmental Representative further fails to dispute that the question whether or not a port terminals Jetty / Trestle is to be treated as plant and machinery is no more res integra since this tribunal s co-ordinate bench decision in Kandla Port Trust case [ 2006 (4) TMI 243 - ITAT RAJKOT] has held such assets to be plant and machinery entitled for 25% rate of depreciation. Hon'ble jurisdictional high court has upheld the said view in Revenue s tax [2016 (8) TMI 111 - GUJARAT HIGH COURT] . We therefore find no reason to accept in Revenue s arguments seeking to treat assessee s Jetty Trestle as building block of assets instead of plant and machinery in all cases on merits ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 90/- despite the fact that the said interest was not debited to P L account and therefore the question of claiming the same u/s. 36(l)(iii) does not arise. 5. The learned CIT erred in fact and in law in directing the AO to verify the claim of depreciation on electrical fitting forming integral part of Jetty Trestle and thereby holding that depreciation @ 10% is allowable on the same. 6. The learned CIT erred in fact and in law in exercising the jurisdiction u/s. 263 on the issue of depreciation on Jetty Trestle despite the fact that the same was already considered by the CIT(A) in appeal for the year under consideration. 7. The learned CIT erred in fact and in law in directing the AO to verify the claim of depreciation on an amount of ₹ 3,85,00,000/- being Foreign Exchange Fluctuation u/s. 43A despite the fact that the said issue never formed part of showcause notice u/s. 263(1) and therefore direction on this issue is beyond the preview of section 263. 8. Your Appellant craves the right to add to or alter, amend, substitute, delete or modify all or any of the above grounds of appeal. 3. The brief facts of the case are that the assessee is a Publ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as also noticed that assessee had claimed depreciation on account of Foreign Exchange Fluctuation, therefore the ld.Assessing Officer(AO) was directed to pass a fresh order denovo. 6. On the other hand, the ld.Departmental Representative(DR) relied upon the order passed by the ld.CIT. 7. We have heard both the Counsels and perused the material placed on record, judgements cited by the parties as well as orders passed by the Revenue Authorities. In order to decide the controversy in question, it is necessary to first of all evaluate the show-cause notice issued by the ld.CIT u/s.263 (1) of the Act which is at page no.148 / 149 of the paper book and same reproduced below: Office of the Commissioner of Income-tax-I, Aayakar Bhavan, 2nd floor, Annexe Building, Race Course, Baroda. ________________________________________________________ No. BRD/CIT-I/HQ/263/GCPTCL/2013-14 Dated: 09.12.2013 To, The Principal Officer, M/s Gujarat Chemical Port Terminal company Limited, Po.; Lakhigam, Tal. Vagree Dahej, Bharuch-392130 Sir, Sub: Proceedings u/s 263 of the I.T. Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ft copy of all submissions may also please be given in CD. Yours faithfully, Sd/- (Nagarajan S.) For Commissioner of Income Tax-I, Baroda. 8. After having gone through the aforementioned show-cause notice, we find that CIT has issued the show-cause notice u/s.263(1) of the Act, primarily on accounts of two grounds. However, the ld.CIT while passing the impugned order has held that assessee had claimed depreciation on account of Foreign Exchange Fluctuation it has been allowed in total disregard of section 43A of the Income Tax Act, therefore, the ld.AO was directed to pass a fresh order denovo. 9. At this stage, we relied upon the decision of the Co-ordinate Bench of ITAT Ahmedabad in the case of Arsh Industrials Investment Pvt. Ltd., vs. ITO (supra) wherein it is held as Where the show-cause notice mentioned only the propriety of allowing relief under section 80J when the unit had made a loss. The Commissioner could not give directions to re-compute the capital employed also which was not mentioned in the notice. and in Ultramarine Pigments Limited vs. ACIT it is held as below: 7. We have considered the rival submissions and perused the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice as well as findings recorded by learned CIT while passing the order u/s. 263, we have noticed that the grounds taken by learned CIT while issuing show-cause notice is with regard to the disallowance but in the final order passed u/s. 263, the learned CIT has categorically mentioned that the Assessing Officer has not carried out any inquiry therefore direction was given to carry out necessary inquiry in this regard. We first of all referred to the judgment passed by the IT AT, Mumbai Bench in the case of Star India Ltd. (supra), wherein it has been categorically held that when the show-cause notice is issued on the ground that the computation is incorrect but the revision is exercised on the ground that the matter was not examined on the merits. The reason which can be inferred from the revision order u/s 263 is different from the reason set out in the show cause notice and therefore in that case from the reason set out in the show cause notice and therefore in that case it was held that if a ground of revision is not mentioned in the show-cause notice, then it cannot be made the basis of the order for the reason that assessee would have had no opportunity to meet the point. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elf engaged in the manufacturing of production of an article or thing. We found support from the judgement rendered by Hon ble Bombay High Court in the case of Associated Bearing Co. Ltd. vs. Commissioner of Income-lax 286 ITR 341 (Bom) and from the judgement of Hon'ble Madras High Court in the case of Commissioner of Income Tax vs. Atlas Export. Enterprise 373 ITR 4 14 (Mad). Therefore, while relying upon the judgement, we hold that the assessee clearly satisfied the conditions of section 31(l)(iia) and is entitled to the claim of additional depreciation in respect of wind mills. Since we have decided the ground No. 1 which was on the point, of jurisdiction regarding passing the order u/s. 263 and given detailed findings that the order u/s. 263 itself is not maintainable, therefore there is no need to deal with the other issues. 10. In the result net result, appeal is allowed. 10. And also in CIT vs. Roadmaster Industries of India Ltd., it is held as A revisional order can be passed only after giving an opportunity of hearing to assessee. 11. After appreciating the facts of the present case, we are of the view that the reasons, which can be inferred from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 4,05,58,751/- made on account of disallowance of excess claim of depreciation. (iii) On the facts and in the circumstances of the case and in law, the ld.CIT(Appeals) erred in deleting the addition on account of disallowance of diminution in value of spares of Rs. 19,10,788/- following the decision of his predecessor on the same issue in A.Y. 2007- 08, wherein it was held that the method of accounting consistently followed by the assessee and diminution claimed by the assessee for the assessment year 2006-07 was accepted by the department. The ld.CIT(Appeals) erred in not appreciating the fact that the department had not considered the issue in the assessment year 2006-07 as was done in the year under consideration, and that though the spares are not usable, such spares forms part of the stock of the company and the loss is notional loss, which was never incurred by the assessee. 16. Ground No.1 and 2 relates to repair of machinery. Ground No.1: At the very outset, it was submitted by ld.AR that this is covered in ground in ITA No.3080/Ahd/2011 for A.Y. 2007-08 and 2008-09 at para 3 to 7 reproduced as below: 3. The assessee has challenged the action of the CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Having regard to the nature and ordinary course of business and the object for which such repair expenditure have been incurred and having regard to the Revenue character of the expenditure, we have no hesitation to accept the plea of the assesse for its allowability as revenue expenditure. 7. In the result, appeal of the assessee in ITA No.3080/Ahd/2011 for AY 2007- 08 is allowed. 17. Ground No.2 is also covered in para 9 of assessee s own case in ITA No.3077 to 3.79/Ahd/2011 for A.Y. 2004-05 2006-07 in which relevant para reproduced below: 9. Learned Departmental Representative fails to dispute the crucial fact that the assessee had in fact disclosed all its depreciation details in Form 3CD Annexure 1A. Her case however is that Section 149(1)(b) envisages time limit for issuing Section 148 notice to be between four years to six years squarely appli9es in facts of the instant case. We find no merit in the instant argument as the above statutory provision does not operate as an exception to Section 147 (first proviso). It is not a proviso to proviso in other words. Learned Departmental Representative further fails to dispute that the question whether or not a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d as under: 1. The learned Commissioner of Income-tax (Appeals) 1 [ the CIT(A) ], Baroda erred in fact and in law in confirming the action of the Deputy Commissioner of Income-Tax Circle 1(1), Baroda ( the AO ) in making a addition of Repairs Maintenance expenditure to the extent of ₹ 9,05,748/- treating as capital expenditure. 2. The learned CIT(A) erred in fact and in law in confirming the action of the AO in charging interest u/s 234D of the Income Tax Act, 1961. 3. Your respondent craves a right to add to or amend, alter, substitute, delete or withdraw all or any of the grounds of cross objections. Condonation of Delay: 23. We have gone through the contents of the application for condonation of delay in filing the Cross Objection. Keeping in view of the contents of the application as well as considering the fact that Cross Objection were fined during the pendency of appeal filed by the Revenue. We are of the view that the delay in filing the C.O. can very well be condoned, therefore, we condone the delay. 24. Keeping in view in our decision in Ground No.1 of the appeal filed by the Revenue in ITA No.2998/Ahd/2014, we allow this Cross Obje ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hemical Port Terminal Co.Ltd., Vs. DCIT, Circle-1(1)(1), Surat in I.T.A.No.1888/AHD/2016 for the assessment year 2012-13 dated 13.12.2019 ( copy filed ) passed by Surat Bench of ITAT. 28. On the other hand, the ld.CIT-D.R. relied on the orders of Lower Authorities. 29. We have heard the Counsels of both the parties and we also perused the material placed on record and orders passed by the Revenue Authority as well as the judgments cited by the parties. From the records, we find that the issue is squarely covered by the decision Co-ordinate Bench of ITAT in M/s.Gujarat Chemical Port Terminal Co.Ltd., Vs. DCIT, Circle-1(1)(1), Surat in I.T.A.No.1888/AHD/2016 (supra) in which para 7 8 held as under: 7. We have heard the Counsels of both the parties and we also perused the material placed on record and orders passed by the Revenue Authority as well as the judgments cited by the parties. From the records, we find that the issue is squarely covered by the decision Co-ordinate Bench of ITAT Surat in assessee s own case in I.T.A.No.2414/Ahd/2015/SRT A.Y. 2013- 14(supra). 8. Since the facts are identical, we are of the considered opinion that the assessee is eligible for d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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