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TMI Blog2022 (4) TMI 480X X X X Extracts X X X X X X X X Extracts X X X X ..... and maintenance, employee cost, administrative cost, administrative expenses which pertain to earlier years having claimed in the current year. It was submitted that due expenses or business expenses and having crystallized during the year. These expenses are overlapping over the years and no double deduction has been claimed. These are the spillover expenses which pertain to more than one previous year and the similar system has been followed continuously in all the years. The Assessing Officers sole reason for disallowance is that they do not relate to the previous year under consideration. However in reality it is found that these expenses belong to the previous year but crystallized in the instant year. In the absence of any change in the tax rate for the successive years the interests of revenue are not jeopardized. Hence, we decline to interfere with the Ld. CIT(A) on this grounds. - Decided against revenue. - ITA No. 5311/Del./2017, 5312/Del./2017, 5313/Del./2017, 5314/Del./2017 & 5315/Del./2017 (A.Y. : 2003-04, 2007-08, 2008-09, 2009-10 & 2013-14) - - - Dated:- 24-11-2021 - SHRI AMIT SHUKLA, JUDICIAL MEMBER AND DR. B.R.R. KUMAR , ACCOUNTANT MEMBER Revenue by: Sh. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cember 2008, allowed part relief. Assessee filed a further appeal before this Tribunal (ITAT). A coordinate Bench, vide order dated 25th February 2011 in ITA No. 1174/DEL/2009, set aside the matter with the following directions: 5. We have duly considered the rival contentions and gone through the record carefully. No doubt, audited accounts for this assessment year as well as earlier assessment years are relevant material for determining the true income of the assessee. In the absence of such accounts, it is difficult to determine the taxable income of the assessee. Assessing Officer has made a major disallowance in respect of depreciation claim because of this anomaly. It is also true that auditor of the assessee has to be appointed by learned CAG but to our mind, assessee should have persuaded the learned CAG to get the auditor appointed in time. If we look into the negligence at the end of assessee vis a vis the punishment in the shape of tax liability then the punishment is disproportionate to the negligence. Therefore, in the interest of justice, we are of the opinion that assessee deserves one more opportunity to plead all the issues on the basis of the audited accounts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orated on 12-2-2001 by Government of Uttaranchal for management of running generating stations, development and construction of new hydropower projects in the State of Uttaranchal. The Central Government vide its order dated 5-11- 2001 transferred all hydro power plants located in the State of Uttaranchal to UJVNL. Although the company took the financial administrative control of the plants immediately thereafter with effect from 9-11-2001, the Transfer Scheme for transfer of values of assets liabilities has not been finalized. In absence of any transfer scheme, Nigam has derived its provisional opening balances, on the basis of information available with it received from UPJVNL, to complete its accounts. The difference between opening balances of Assets liabilities has been shown as Reconstruction Reserve under Capital Reserve in the Balance Sheet pending finalization of Transfer Scheme. From the perusal of the Balance Sheet of UPJVNL it will be clear that there was total Fixed Assets as on 31-3-2001 is ₹ 998.92 crores, out of which 682.05 crores was received out of demerger of UPJVNL vide notification letter dated 5-112001 correspondingly the depreciation upto that da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. Commissioner of I. Tax Appeals, as such no appeal was filed by the assessee for the aforesaid Assessment Year. However, the department had filed an appeal before the Hon ble ITAT against the order of CIT(A)-1. Dehradun for the aforesaid A.Y. 2005-06 only on one ground I.e., for allowing depreciation on fixed assets acquired from UPJVNL, the aforesaid appeal of the department has been dismissed by the Ld. ITAT New Delhi on 13thAugust, 2009, due to non approval of COD (Committee of Dispute). As per our knowledge no appeal has been filed so far, against the aforesaid order of the Hon ble ITAT, moreover the above proceedings are also time barred by limitation, hence the order of the Ld. CIT (A) is final. Copy of the order of Hon ble ITAT is enclosed herewith as Annexure 9. 4.2 The findings of Ld. AO and the averments of the Ld. AR have been considered. A perusal of the facts reveal that on demerger the assets were divided in a fixed ratio and needless to say, the cost of the same (WDV as on that date) was duly accounted for by both the entities. Thus, it is difficult to understand how it can be said that the assets were acquired free of cost. In any case there have been a succ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee is entitled to depreciation on the written down value of these assets which been prescribed in Explanation 2B of section 43(6) of the Income Tax Act, 1961. The assessee is, therefore, entitled to depreciation. Somewhat similar situation arose in case of M/s Bharat Sanchar Nigam Limited (BSNL) when it got incorporated in 2000. Prior to BSNL s incorporation, the telecommunication services were being provided by Government of India, Ministry of Communication through its two departments, namely Department of Telecommunication Services and Department of Telecommunication Operation. The AO in case of BSNL referred to the capital structure of the BSNL to draw an inference that the cost of assets was being met by the general reserve as reflected in the capital structure of the company. As per AO, a sum equal to the general reserve would be required to be reduced from the cost of the assets in terms of Explanation 10 of Section 43(1) of the Act. This has been negated by the Hon ble Delhi High Court vide order dated 09th May 2013 reported in 355 ITR 188(Del) by observing as under: 26. The scheme of hiving off the business of telecom services by Government of India to a corpor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contents and the history of the assessee. In this case, the assets have been transferred from Uttar Pradesh Government (UPJVNL) to Uttaranchal Government (UJVNL). There is no claim of the depreciation twice by both the Governments. The demerger led to division of assets in a fixed ratio and the same was duly accounted for both the entities as per the written down value (WDV) as on that date. The depreciation on de-merger cannot be a forgone benefit owing to de-merger, which is the result of state reorganization. Hence, we decline to interfere with the reasoned order of the Ld. CIT (A). Prior Period expenses: 7. Heard the arguments of both the parties and perused the material available on record. 8. We find in all the years the certain expenses like repair and maintenance, employee cost, administrative cost, administrative expenses which pertain to earlier years having claimed in the current year. It was submitted that due expenses or business expenses and having crystallized during the year. These expenses are overlapping over the years and no double deduction has been claimed. These are the spillover expenses which pertain to more than one previous year and the simi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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