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TMI Blog2021 (4) TMI 672X X X X Extracts X X X X X X X X Extracts X X X X ..... Act and directing the Assessing Officer to pass a fresh assessment order. 3. The appellant craves leave to add, alter, amend and/or withdraw any ground or grounds of appeal either before or during the course of hearing of the appeal. 3. The only issue raised by the assessee is that the learned Pr. CIT erred in setting aside the assessment order dated 02-11-2016 framed under section 143(3) by holding the same as erroneous insofar prejudicial to the interest of Revenue. 4. The assessee is a public limited company and it was engaged in the business of manufacturing of TMT bars. Subsequently, the activities of finance and investment were also incorporated in the main object clause of the memorandum of association. The assessee for the year under consideration declared income of Rs. 1,78,03,580/- in original return filed under section 139(1) of the Act comprising of the following income: i. Business income of Rs. 36,83,692/- ii. STCG of Rs. 1,41,19,885/- and iii. LTCG of 97,295/- only. 4.1. Subsequently, the assessee filed revised return of income declaring total income of Rs. 63,27,320/- comprising of the following income: i. Business income of Rs. 52,18,327/- ii. STCG o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uring the year and invested the entire fund into the mutual fund and deposit and further object clause of the MOA was amended i.e. from manufacturing activity to the financing activity. For financing activities it also applied to RBI to act as NBFC. Thus the observation that the assessee in not engaged in business activity is wrong. As such it is engaged in the business of financing and investing activity, carried out throughout the year which is evident from increase and decrease of investment shown as on 31st march 2013 and 2014. Accordingly the assessee claimed that the claim of depreciation on 3 new car under the block of plant and machinery is justified as these were put use in its business activities. 4.7. With regard to the adjustment of purchase of new car for Rs. 1,30,10,896/- with the sale of plant and machineries for Rs. 1,62,93,966/-, the assessee submitted that both the assets fall under the same block of 15%. Therefore the same should be treated as cumulatively not separately. But due to some oversight, in original return, both the assets were treated separately. Therefore it rectified the mistake by revising the return. Further the assessee claimed that the above ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and motor cars are under the heading-III in Part-A "Machinery and Plant" and the first two items are: (1) Machinery and Plant other than those covered by sub-items (2), (3) and (8) below:- (2) motor cars, other than those used in a business of running them on hire, acquired or put to use on or after 01/04/1990. Thus as above, the block of 'Machinery and Plant' falls in sub block of sub-item (I) of Item-III, whereas motor cars falls in Sub item (2) in Item-III of the depreciation table. 3.3 No doubt, both the items machinery and plant and motor cars are eligible for depreciation @ 15% but they do not form part of the same block. Clearly the block" of machinery appellant consists of all the items except motor cars in sub-item No. (2) and other items in sub-item No. (3) and various items in sub-item No. (8) below sub-item (1) of the block machinery and plant. Therefore, as per express rules, motor cars do not form part of the same block as machinery and plant. 3.4 he A.O. has not examined this aspect at all while considering the revised return of the assessee and completed the assessment. The assessee also in its submission has clubbed the two distinct blocks of mac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allegation of the learned Pr. CIT is that there are different block of assets for the plant and machinery is viz-a-viz. motor cars as per appendix-I under the heading III of the depreciation schedule. Accordingly the learned Pr. CIT was of the view that the motor cars purchased by the assessee cannot form part of the block of assets under the category of plant and machinery. But the assessee in the revised computation of income has shown both the assets under the same category which was also accepted by the AO. In this connection we note that admittedly there are 2 different block of assets as specified in the depreciation schedule but both the assets carry the same rate of depreciation i.e. 15%. For this purpose we find necessary to refer the definition of the block of assets as provided under sub-section (11) to section 2 of the Act which reads as under: (11) "block of assets" means a group of assets falling within a class of assets comprising-- (a) tangible assets, being buildings, machinery, plant or furniture; (b) intangible assets, being know-how, patents, copyrights, trade-marks, licences, franchises or any other business or commercial rights of similar nature, in r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate. [Para 5.2] 9.3. In this regard we also find support and guidance from the order of the Hon'ble Mumbai Tribunal in case of Avin Pumps (P.) Ltd. in ITA No. 3840/Mum/2012 reported in 40 taxmann.com 123 where in similar issue the Hon'ble bench held as under: 5. We have considered the issue and examined the rival contentions. As far as legal principles are concerned, the co-ordinate Bench in the case of Artic (supra), held that the assessee would be entitled to claim set off of cost of new asset acquired in the previous year, even if the assessee was not carrying on the same business or the other business. This is also one of the contentions of the Assessing Officer that the assessee stopped business, which was also contested by the assessee. The co-ordinate Bench in the abovereferred case held as under: 'Section 50 makes special provision for the computation of capital gains in the case of depreciable assets. The effect, in brief, of the section is to make certain modifications in the deductions to be allowed under sections 48 and 49 from the consideration received as a result of the transfer. Thus, in the case of depreciable assets, instead of the deductions allo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the case of CIT v. Express Newspapers Ltd. [1964] 53 ITR 250 (SC), it would be clear that the court should not allow the provisions relating to section 50(1)(iii) to be interpreted in the manner suggested by the Revenue. There is no explicit or express requirement that the new asset should be put to use in any business carried on by the assessee. The Central Board of Direct Taxes Circular No. 469, dated September 23, 1986 ([1986] 162 ITR (St.) 21) shows that the main object of introducing the block of assets concept was only to reduce time and effort spent in detailed record maintenance. While giving effect to this object, there could have been no justification or warrant for prescribing a condition that the new asset, in addition to being an asset in respect of which the same rate of depreciation is prescribed as in the case of the other assets within the class, should also be used in a business carried on by the assessee. In the case of a building, the new building purchased should be one in respect of which the same rate of depreciation, as is prescribed in respect of the other buildings, has been prescribed by the rules. If the assessee carries on a business, in that case h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of different types, but in respect of which same percentage of depreciation is prescribed, are to be treated and form part of the block of assets. [Para 13] Appendix-I under rule 5 of the Income-tax Rules, 1962 prescribes and states the table of rates at which depreciation is admissible and is divided into different parts and sub-headings. Rates of depreciation have been prescribed. Assets of different types which have been prescribed same rate of depreciation have been clubbed and put together. Appendix does not stipulate and provide that each unit or division of assessee has to be separately accounted for and shown or forms a separate block of assets. The table, in fact, does not postulate and require any such division or bifurcation. The bifurcation is made between tangible assets and intangible assets and then under various sub-headings as per the rate of depreciation mentioned in the said appendix. [Para 14] Section 50 states that notwithstanding anything contained in section 2(42A) where capital asset is an asset forming part of the block of assets on which depreciation has been allowed, then provisions of sections 48 and 49 will be applicable, subject to the modificati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a or abroad in cash or derivatives segments including forward contracts and to carry on business of investing and/or trading in commodities through dealer, merchants, agents and the commodities Exchange(s) and/or Spot Exchange(s) including taking and/or giving physical delivery of commodities, articles, products. 8. To invest, acquire, subscribe, purchase, hold, sell, divest or otherwise deal in securities, financial instruments, financial products, units, bonds, commercial papers, acknowledgments, deposits, notes, obligations, warrants, government securities loans, loan certificates, all kinds of derivatives including interest derivatives, futures, forwards, options, calls, swaps, rights or interest in securities, foreign currencies, carbon credits, financial securities and any other securities issued by any entity whether for the purpose of hedging, arbitrage, or for any other purpose. 9. To buy, sell, export, import, deal in all kinds of commodities and derivatives transactions in gold, silver, platinum, other precious metals, and to deal on any commodity exchange and for this purpose take membership of any commodity exchange or with any bullion bank or any canalizing agency ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bill copies is as per enclosed Annexure-4. As regards to gain/loss we submit that sale proceeds realized from sale of fixed assets was reduced from block of assets and consequential gain/loss was offered to tax under section 50C of the Act which is verifiable from computation of total income attached herewith vide Annexure-5. 5. Details of Claim u/s. 32(1)(iia) of Act (Sr. No. 7) We have not claimed any additional depreciation during the year and accordingly details called for are not applicable. 9.11. Thus from the above, it is transpired that the AO during the assessment proceedings have carried out necessary verification after applying his mind. Thereafter he has taken a conscious decision by accepting the income declared by the assessee in the revised return of income. Once the AO has taken a view after necessary verification then the learned Pr. CIT cannot substitute the view taken by the AO by his own view on the ground of non-verification. In holding so we draw support and guidance from the order of the Coordinate bench of this tribunal in case of Smt. Minal Nayan Shah vs. Pr. CIT in ITA No. 643/Ahd/2019 reported in: 111 taxmann.com 516, where it was held as under: I ..... X X X X Extracts X X X X X X X X Extracts X X X X
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