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TMI Blog2020 (10) TMI 506X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of the building - HELD THAT:- As per the provisions of section 32(1)(iii) it is apparent that the amount of 17,38,711/- has to be removed from the block of assets and conversely treated as depreciation. It appears from the orders of the Ld. Revenue Authorities that they have only partially followed the provisions of the Act by excluding the amount of 17,38,711/- from the block of assets without granting depreciation for the entire amount of 17,38,711/- which is erroneous. Therefore, we hereby set aside the order of the Ld. CIT (A) on this issue and further direct the Ld. AO to grant depreciation of 17,38,711/- towards the demolition of the building and delete the same from the block of asset. While doing so, the Ld. AO shall also ensure that the same amount is not claimed as loss in the P L Account once again which will amount to double deduction. Disallowance of depreciation - discarding the furniture and remove the same from the block of asset - HELD THAT:- As per the provisions of section 32(1)(iii) it is apparent that the amount of 4,758/- has to be removed from the block of assets and conversely treated as depreciation. It appears from the orders of the Ld. Revenue Author ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. AO for deleting ₹ 17,38,711/- from the block of assets "building" by stating that the asset was no longer in existence as the building was demolished and failed to grant depreciation. (4) The Ld. CIT (A) has erred in confirming the order of the Ld. AO for deleting ₹ 4,758/- from the block of assets "furniture" by stating that the asset was no longer in existence as the furniture was discarded and failed to grant depticiation. (5) The Ld. CIT (A) has erred in confirming the addition made by the Ld. AO for ₹ 3,24,180/- towards excise duty on the finished goods, by stating that the assessee has not included the same while valuing the closing stock of finished goods. (6) The Ld. CIT (A) has erred in not adjudicating the ground raised by the assessee with respect to initiation of penalty proceedings U/s. 271(1)(c) of the Act by the Ld. AO. At the outset, we find this ground raised by the assessee to be premature and therefore, we dismiss this ground raised by the assessee. 3. At the outset, it is observed from the record that there is a delay of 368 days in filing the appeal before the Tribunal. In this regard, the assessee had filed a petition seeking condon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 40/-. Compared to the income declared by the assessee and the turnover of the assessee the expenditure incurred towards the purchase of tools amounting to ₹ 3,25,182/- is quite negligible and it does not bring any significant influence on the profit of the company. The Generally Accepted Accounting Principles (GAAP) recognize the concept of "materiality" ie., "in any financial accounting statements, there are some transaction that are too small to be recognised and such transactions might not have any impact on the analysis of the financial statement by an external observer; removal of such irrelevant information to keep the financial statement crisp and consolidated is called the concept of materiality". This concept is also accepted by the financial accounting standards board (FASB). From the facts of the case it is apparent that the assessee has drawn its statement of affairs adhering to the principle of materiality concept. In this situation, we are of the considered view that the disallowance made by the Ld. Revenue Authorities is not warranted as the expenditure claimed by the assessee is too negligible compared to the volume of the business of the assessee and further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... et aside the order of the Ld. CIT (A) on this issue and further direct the Ld. AO to grant depreciation of ₹ 17,38,711/- towards the demolition of the building and delete the same from the block of asset. While doing so, the Ld. AO shall also ensure that the same amount is not claimed as loss in the P & L Account once again which will amount to double deduction. It is ordered accordingly. 12. Ground No: 4: Disallowance of depreciation amounting to ₹ 4,758/-:- 13. During the course of scrutiny assessment proceedings it was observed by the Ld. AO that the assessee had not deleted the amount of ₹ 4,758/- from the written down value of the block "furniture" however availed depreciation on the entire amount of Rs. ₹ 4,758/-. It was explained by the assessee that the furniture was in a dilapidated condition and therefore it was discarded and nothing was realised on the disposal of the furniture. The Ld. AO opined that since the furniture was no longer in existence the written down value of the asset has to be removed from the block of assets for the purpose of calculation of depreciation. Accordingly, the Ld. AO disallowed the claim of depreciation of ₹ 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO agreeing with his view 17. Before us, the Ld. AR vehemently argued that the assessee had not paid Excise Duty on the closing stock and therefore for the purpose of valuation of the closing stock the Excise Duty payable should not be included and if done so it will be erroneous. Hence, it was pleaded that the addition made on this count may be deleted. The Ld. DR on the other hand submitted that the assessee had not furnished the details regarding the same which led to the addition and therefore he requested that the matter may be remitted back to the file of Ld.AO for verification. 18. After hearing both sides, we are of the considered view that an opportunity should be provided to the assessee to establish before the Ld. Revenue Authorities that the assessee had not paid the Excise Duty for the unsold finished stock. Therefore, in the interest of justice, we hereby remit back the matter to the file of the Ld. AO to examine whether the assessee had not paid the Excise Duty for its finished closing stock and if found so delete the addition because in that case unpaid Excise Duty need not be added to the value of the finished closing stock of the assessee. If found otherwise, r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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