9911796707
TMI Blog2020 (6) TMI 369X X X X Extracts X X X X X X X X Extracts X X X X ..... e ground of appeal of the revenue is dismissed. Disallowance on account of prior period expenses - HELD THAT:- DR at the time of hearing has also not brought anything on record contrary to the argument advanced by the learned AR. Hence respectfully following the principle laid down in the own case of the assessee by this tribunal, we set aside the finding of the learned CIT (A) and direct the AO to delete the addition made by him. Hence the ground of appeal of the assessee is allowed. Set off of the unabsorbed depreciation against the income of the current year - HELD THAT:- We find merit in the argument advanced by the assessee. Accordingly we set aside the issue to the file of the AO with direction to allow the set off of the unabsorbed depreciation of the earlier years after considering the appeal of the assessee for the assessment year 2009-10. Hence the ground of appeal of the assessee is allowed for the statistical purposes. Addition for the advance against depreciation - HELD THAT:- It is the case of the assessee that such advances to be adjusted with the power so supplied in the future. We, thus, having regard to the facts and circumstances of the case find no infirmity in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come Tax Rules. Hence, the ground of appeal of the assessee is partly allowed. Deduction under section 80-IA (4) - HELD THAT:- Assessee did not claim the deduction under section 80-IA (4) of the Act, for the reason that there was no positive income. However, in our considered view if there any positive income in the hands of the assessee on account of the disallowances made by the AO in the assessment proceedings then the assessee in our considered view should be entitled for the deduction under section 80-IA(4) of the Act, as per the provisions of law. As such we do not find any infirmity in the direction of the learned CIT (A). Hence the ground of appeal of the revenue is dismissed. Order being pronounced after ninety (90) days of hearing - COVID-19 pandemic and lockdown - HELD THAT:- Taking note of the extraordinary situation in the light of the COVID-19 pandemic and lockdown, the period of lockdown days need to be excluded. See case of DCIT vs. JSW Limited [ 2020 (5) TMI 359 - ITAT MUMBAI ] - Shri Rajpal Yadav, Vice President And Shri Waseem Ahmed, Accountant Member For the Assessee : Shri S. N. Soparkar, Sr. Advocate with Shri Parin Shah, A.R. For the Revenue : Shri Aarsi Pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee which is placed on pages 303 to 345 of the paper book. Accordingly, the learned AR for the assessee claimed that there cannot be any disallowance of interest expenses. 7. On the other and the learned DR vehemently supported the order of the authorities below. 8. Both the learned AR and the DR before us relied on the order of the authorities below to the extent favourable to them. 9. We have heard the rival contentions of both the parties and perused the materials available on record. Admittedly the own fund of the assessee exceeds the amount of investment. Accordingly presumption can be drawn that the borrowed fund was not utilised for such investments. Accordingly There cannot be any disallowance of any interest expenses in view of the judgment of the Hon'ble Gujarat High Court in the case of PCIT v. Shreno Ltd. reported in 409 ITR 401 wherein it was held as under: 12. The exposition of law made by the Supreme Court in case of S. A. Builders Ltd. (supra) and observation made therein have been applied by this court on various occasions, particularly in connection with the disallowance to be made under Section 14A of the Act. It has been held that if the assessee can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issue in the favour of the assessee. The relevant extract of the order is reproduced as under: 11. Heard the respective parties, perused the relevant materials available on record. It appears from the records that while rejecting the case of the assessee, the Learned AO observed that the assessee is following mercantile system where expenditure is recorded if it is due during the previous year irrespective of fact whether it is paid during the previous year or not. Under the above circumstances, since the assessee is consistently following the mercantile system of accounting, expenses incurred prior to relevant accounting period are not allowable as expenses in subsequent years. On this issues he retied upon the judgment passed in the matter of Indermani Jatia v. CIT, 351ITR 298 (SC). The view has been reiterated by the Ld. CIT(A) as well. 12. It is a settled principle of law that when the assessee followed the mercantile system of accounting, expenditure incurred during the previous year though pertaining to an earlier period is deductable. We have carefully considered the judgment passed in the matter of Kedarnath Jute Mfg. Co. Ltd. v. CIT reported in 82 ITR 363 (SC) where it was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... raised no objection if the matter is set aside to the file of the AO for fresh adjudication as per the provisions of law. 20. We heard the rival contentions of both the parties and perused the materials available on record. We find merit in the argument advanced by the learned AR for the assessee. Accordingly we set aside the issue to the file of the AO with direction to allow the set off of the unabsorbed depreciation of the earlier years after considering the appeal of the assessee for the assessment year 2009-10. Hence the ground of appeal of the assessee is allowed for the statistical purposes. 21. The next issue raised by the assessee is that the learned CIT (A) erred in confirming the order of the AO by sustaining the addition of ₹ 25,42,00,000/- for the advance against depreciation. 22. At the outset the learned counsel for the assessee submitted that the identical issue has been decided by this tribunal in the own case of the assessee for the assessment year 2009-10 in ITA No. 307/AHD/2014 vide order dated 27th December 2019 against the assessee. Accordingly, the learned AR prayed to us to dismiss the ground of appeal raised by the assessee after providing the same d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch the appellant company has shown any income. Being aggrieved by the same the assessee is before us. 16. We have heard the respective parties perused the relevant materials available on record. 1n terms of the power projects agreement as it appears from the records the appellant company has been raising invoices to Gujart Ujja Vikas Nigam Ltd. (GUVNL) on the calculation of fixed charges as mentioned therein. One of such components of fixed charges is depreciation. 1t was further agreed between the two parties that in the year the appellant since has been facing heavy cash flow due to repayment of debenture, Gujarat Urja Vikas Nigam Ltd. (GUVNL) will give amount in advance to the appellant by way of advance depreciation and the same would be recovered against future bill. Hence, the amount of ₹ 14.92 has been received as advance by the appellant. However, as it appears from the orders that the appellant has not been able to prove that advances received are in fact adjusted against future bills or how this particular amount has been received in current year and treated as advance is ultimately settled in the subsequent assessment year. 1n that view of the matter, the Learned C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as per the previous model of accounting used by it in the immediate preceding assessment year. Thus the AO found that the assessee by switching the policy of treating the capital spares as fixed assets has claimed excessive depreciation amounting to ₹ 1,69,46,634/-. Accordingly the AO disallowed the excess amount of depreciation by adding to the total income of the assessee. 27. Aggrieved assessee preferred an appeal to the learned CIT (A). 28. The assessee before the learned CIT (A) submitted that there is no provision under the Act, allowing the amortization on the capital spares over a period of 14 years. As such the provisions of the Act mandates to claim the depreciation on the capital spares at the rate of 15% which has been corrected by the assessee from the year under consideration. The assessee also challenged the working of the disallowance made by the AO. As per the assessee the excess amount of depreciation comes at ₹ 53,57,970/- only and not the amount as computed by the AO at ₹ 1,69,46,634/- only. 29. However the learned CIT (A) disagreed with the contention of the assessee and confirmed the order of the AO by observing as under: 9.2 I have consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accounting, so that it might not be required to pay income-tax on notional income. There is nothing in the Act which precludes the assessee, who bona fide desires to switch over to another system of accounting, from doing so. There was no finding of fact that the switch over to the cash system of accounting in the previous year relevant to the assessment year 1972-73 was not bona fide. Besides, it was not shown by the department that the change lacked durability or regularity and was merely a stop-gap arrangement to avoid payment of tax. In such a situation one failed to understand why a bona fide assessee should be precluded from switching over to another system of accounting which he found convenient and which would reflect his real income. Circumstances had compelled the trustees to switch over to cash system of accounting which was the only course open to a prudent trustee for preserving the property of the trust. Thus, the assessee was entitled to switch over to the cash method of accounting. 34. In view of the above we hold that the order of the learned CIT (A) is not sustainable. Accordingly, we set aside the same and direct the AO to delete the addition made by him. Hence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isallowance made under section 14A r.w.r. 8D cannot be resorted while determining the expenses as mentioned under clause (f) of explanation 1 to section 115JB of the Act. However, it is also clear that the disallowance needs to be made with respect to the exempted income in terms of the provisions of clause (f) to section 115JB of the Act while determining the book profit. In holding so, we draw support from the judgment of Hon'ble Calcutta High Court in the case of CIT v. Jayshree Tea Industries Ltd. in GO No.1501 of 2014 (ITAT No.47 of 2014) dated 19.11.14 wherein it was held that the disallowance regarding the exempted income needs to be made as per the clause (f) to Explanation-1 of Sec. 115JB of the Act independently. The relevant extract of the judgment is reproduced below:- We find computation of the amount of expenditure relatable to exempted income of the assessee must be made since the assessee has not claimed such expenditure to be Nil. Such computation must be made by applying clause (f) of Explanation 1 under section 115JB of the Act. We remand the matter for such computation to be made by the Ld. Tribunal. We accept the submission of Mr.Khaitan, Ld. Senior Advocat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the issue raised by the revenue has already been adjudicated along with the appeal of the assessee bearing ITA No. 1510/AHD/2016 vide paragraph number 9 of this order. For the detailed discussion, please refer the relevant paragraph. Respectfully following the same we dismiss the ground of appeal raised by the revenue. 45. The next issue raised by the revenue is that the learned CIT (A) erred in allowing the claim of the assessee under section 80-IA (4) of the Act though there was no claim made in the income tax return. 46. The assessee in the year under consideration has not claimed any deduction under section 80-IA(4) of the Act, as there was no positive business income for the year under consideration. However the assessee before the learned CIT (A) has claimed the deduction under section 80-IA(4) of the Act if its income turns to be positive on account of disallowances made by the AO. The contention of the assessee was accepted by the learned CIT (A). Accordingly he directed the AO allow the deduction under section 80-IA(4) of the Act, if there is the positive income of the assessee. 47. The revenue against the direction of the learned CIT (A) preferred an appeal before us. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso. In any case, there was unprecedented disruption of judicial wok all over the country. As a matter of fact, it has been such an unprecedented situation, causing disruption in the functioning of judicial machinery, that Hon'ble Supreme Court of India, in an unprecedented order in the history of India and vide order dated 6.5.2020 read with order dated 23.3.2020, extended the limitation to exclude not only this lockdown period but also a few more days prior to, and after, the lockdown by observing that In case the limitation has expired after 15.03.2020 then the period from 15.03.2020 till the date on which the lockdown is lifted in the jurisdictional area where the dispute lies or where the cause of action arises shall be extended for a period of 15 days after the lifting of lockdown . Hon'ble Bombay High Court, in an order dated 15th April 2020, has, besides extending the validity of all interim orders, has also observed that, It is also clarified that while calculating time for disposal of matters made time-bound by this Court, the period for which the order dated 26th March 2020 continues to operate shall be added and time shall stand extended accordingly , and also o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 continues to operate shall be added and time shall stand extended accordingly . The extraordinary steps taken suo motu by Hon'ble jurisdictional High Court and Hon'ble Supreme Court also indicate that this period of lockdown cannot be treated as an ordinary period during which the normal time limits are to remain in force. In our considered view, even without the words ordinarily , in the light of the above analysis of the legal position, the period during which lockout was in force is to excluded for the purpose of time limits set out in rule 34(5) of the Appellate Tribunal Rules, 1963. Viewed thus, the exception, to 90-day time-limit for pronouncement of orders, inherent in rule 34(5)(c), with respect to the pronouncement of orders within ninety days, clearly comes into play in the present case. Of course, there is no, and there cannot be any, bar on the discretion of the benches to refix the matters for clarifications because of considerable time lag between the point of time when the hearing is concluded and the point of time when the order thereon is being finalized, but then, in our considered view, no such exercise was required to be carried out on the facts of thi ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
