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TMI Blog2022 (2) TMI 1277X X X X Extracts X X X X X X X X Extracts X X X X ..... ms written off - HELD THAT:- In view of the same since identical issue stands adjudicated in favour of the assessee in assessment year 2006-07, the issue stands covered by the said order of the ITAT. Accordingly, the claim of the assessee to small and low value item written off is allowed. Disallowance of Miscellaneous losses and write offs - assessee pointed out that it had been submitted to the Ld. CIT(A) that the impugned losses and write off were on account of loss material through pilferage, shortage of material in transit, shortage arising on physical verification, obsolescence of materials, stores, loss in sale of scrap etc. - HELD THAT:- In view of the above since identical disallowance has been deleted by the ITAT in the case of sister concern of the assessee [ 2015 (6) TMI 1096 - ITAT AHMEDABAD] , the decision in the said case would squarely apply in the present case also following which the impugned disallowances of write offs amounting is deleted. X X X X Extracts X X X X X X X X Extracts X X X X ..... pect of the consumers' contribution, the assessee submitted that the company has developed infrastructure of electrical line and cable network systems to provide the electricity at the consumers' doorstep and as per the rules framed by the Gujarat Electricity Regulatory Commission, the company recovered the amount towards the same from new consumers while releasing the connection to such customers. The benefit from the development of the same accrued to the company over a longer period of time and hence it had written back every year @10% of the year end balance. The A.O. accepted the contention of the assessee that capital grants from the Government and Consumers' contribution are capital in nature, but held that the treatment of 10% transferred to P & L account every year is not in accordance with the provisions of the I.T. Act, 1961. The A.O. held that the assessee company should have reduced the same from the capita! asset to arrive at the actual cost. Accordingly, the A.O. reduced the aggregate of capital subsidy, grant and consumers' contribution received of Rs. 26384.78 lakh from the cost of plant and machinery on a pro-rata basis. The A.O. also worked out th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5,] and is used otherwise than in a business of running it on hire for tourists, exceeds twenty- five thousand rupees, the excess of the actual cost over such amount shall be ignored, and the actual cost thereof shall be taken to be twenty-five thousand rupees.] [Explanation 10.--Where a portion of the cost of an asset acquired by the assessee has been met directly or indirectly by the Central Government or a State Government or any authority established under any law or by any other person, in the form of a subsidy or grant or reimbursement (by whatever name called), then, so much of the cost as is relatable to such subsidy or grant or reimbursement shall not be included in the actual cost of the asset to the assessee : Provided that where such subsidy or grant or reimbursement is of such nature that it cannot be directly relatable to the asset acquired, so much of the amount which bears to the total subsidy or reimbursement or grant the same proportion as such asset bears to all the assets in respect of or with reference to which the subsidy or grant or reimbursement is so received, shall not be included in the actual cost of the asset to the assessee.] 17.2 Proviso to Expl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A) held that excess depreciation claimed on account of capital grant comes to Rs.18.93 crores being 15% of Rs.176,62,04,718/-, i.e. Rs.26,49,30,708/- minus Rs.17,20,37,655/-, which amounts to Rs.9,28,93,053/-, and 15% of Rs.6427.94 lakhs amounting to Rs.964.191 lakh. The submissions of the assessee before us is that the uniform rate of 15% adopted by the CIT(A) is not justified. As per provisions of section 43(1} of the Act, the capital grant should be reduced from the cost/WDV of the relevant asset, and thereafter the depreciation is to be calculated. Thus, the capital grant receipt in respect of asset, on which depreciation is allowable at the rate different from 15% should be worked out as per the applicable rate. The DR could not point out any mistake in the above submission of the assessee. which we find is in accordance with law. We, therefore, set aside the orders of the lower authorities on this issue, and restore the matter back to the file of the AO for adjudication afresh after verifying the proportionate amount of grant relating to different asset, and applying the actual rate of depreciation which relate to these assets.Thus, this ground of appeal of the assessee is al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s accounting policy adopted by the assessee was not in accordance with the provisions of the I.T. Act, 1961 and that the principles of accountancy cannot override taxation laws. Therefore, the A.O. disallowed Rs. 1,26,000/- claimed by the assessee towards small and low value items written off and added to the total income of the assessee. 9. The Ld. CIT(A) upheld by the disallowance made by the A.O. Before us ld. Counsel for the assessee pointed out that identical issue was dealt with by the ITAT in the case of the assessee in assessment year 2006-07 allowing the identical claim. Our attention was drawn to para 18 to 22 of the order is as under: 8. Ground no.3 -reads as under :- 3.0 The learned Commissioner of Income Tax (Appeals) has erred in law and facts in confirming the disallowance of Rs.1,08,030/- under the head small & low value items written off. 19. Addition of Rs.1,08,030/- was made by Assessing Officer towards the claim of assessee of write off of small and low value items of Rs.1,08,030/- as the actual cost of machinery and plant individually was not exceeding Rs.5,000/-. However, ld. Assessing Officer was of the view that w.e.f. 1.4.1996 no such provision exist ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g to Rs 47,88,340/- under the head 'Miscellaneous losses and write-offs'. Since the assessee failed to furnish any documentary evidence in respect of these claims, the A.O. disallowed the claim of Rs. 47,88,340/- and added to the total income of the assessee. The Ld. CIT(A) upheld the order of the A.O. 13. Before us, Ld. Counsel for the assesse pointed out that it had been submitted to the Ld. CIT(A) that the impugned losses and write off were on account of loss material through pilferage. shortage of material in transit, shortage arising on physical verification, obsolescence of materials, stores, loss in sale of scrap etc.. Our attention was drawn to the submission made in this regard before the Ld. CIT(A) placed before us at paper book at page no. 5 is as under: 1.1 In this context, it is submitted that during the year the company has claimed Rs/47,88,340/- on account of miscellaneous losses and write offs. It is submitted that these losses are on account of loss of materials through pilferage, shortage of material in transit, shortage arising on physical verification, obsolescence of materials/ stores, loss in sale of scrap etc. It is, therefore, submitted that the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... NJURIES, DEATHS-STAFF DABHOI O&M DIV 0.49 79530 COMPENSATION FR INJURIES,DEATHS-STAFF ANAND O&M DIV 2.21 79530 COMPENSATION FR INJURIES,DEATHS-STAFF GODHRA O&M DIV 0.18 TOTAL 47.88 15. Ld. Counsel for the assessee further pointed out that in the case of the sister concern of the assessee i.e. Gujarat Energy Transmission Corporation Ltd,the Ld. CIT(A) had allowed identical losses claimed for assessment year 2006-07 and 2007-08 which was upheld by the ITAT in ITA No. 704/Ahd/2012 for A.Y. 2008-09 dated 12.06.2015. Our attention was drawn to the relevant findings of the ITAT of the paper book page no. 62 as under: 38. Brief facts of the case are that the AO observed that the assessee has claimed Rs.1,41,15,000/- on account of miscellaneous loss and write offs. In reply to the show cause notice, the assessee submitted that these losses are on account of loss of materials, through pilferage, shortage of material-in-transit, shortage arising on physical verification, obsolescence of materials/stores, loss in sale of scrap etc. It was submitted that the losses have been incurred in the day-to-day business activities and is purely of revenue nature. The AO observed that from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted that these losses are on account of loss of materials, through pilferage, shortage of material-in-transit, shortage arising on physical verification, obsolescence of materials/stores, loss in sale of scrap etc. It was submitted that the losses have been incurred in the day-to-day business activities and is purely of revenue nature. The AO observed that from the submission of the assessee, it was clear that the assessee's claim was not substantiated with any documentary evidence. Accordingly, he disallowed deduction of Rs.1,41,15,000/-. 39. On appeal, the CIT(A) deleted the addition and held that similar issue was decided by the CIT(A) in favour of the assessee in assessee's own case for the Asst.Year 2006-07 and 2007-08. Following the same, he deleted the disallowance of Rs.1,41,15,000/-. 40. The DR relied on the order of the AO. He could not bring any material on record to how that the relief allowed by the CIT(A) in the Asstt.Year 2006-07 and 2007-08 was appealed against before higher forums, and the order of the CIT(A) was varied by any higher authority. In the absence of any such material, we do not find any good reason to interfere with the order of the CIT(A) on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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