9911796707
TMI Blog2018 (6) TMI 1823X X X X Extracts X X X X X X X X Extracts X X X X ..... it had set-up its Plants during the period of 2000 to 2002 in India. As per the appellant in this phase, it had very limited organizational and functional resources and therefore Gulbrandsen Chemicals Inc., USA assisted it in Plant set up phase engaging external service providers (such as Plant Consultant, Architect etc.). We hold that any expenditure incurred in relation to creation of a capital asset should be capitalized to the relevant asset. Appellant accordingly it also capitalized the amount of Rs. 1,42,66,483/- spent for setting up of the Plants to the respective plants account in FY 2006-07 when it received debit notes from Gulbrandsen Chemicals Inc., USA for such reimbursement. They made the payment. A.O. has invoked Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in confirming the disallowance of Rs.21,39,973/- (being 15% of Rs.1,42,66,483/-) claimed as depreciation on the amount of cost of plant machinery incurred as reimbursement to Gulbrandsen Chemicals Inc., USA of Rs. 1,42,66,483/-. The claim as made by the appellant ought to be allowed and is so prayed. 3. The Ld. CIT(A) has further erred in law and in facts in holding that the claim of depreciation of Rs. 21,39,973/- made by the appellant amounts to filing of inaccurate particulars so as to justify the levy of penalty u/s. 271(l)(c). 4. On the facts and in the circumstances of the case and in law, the Ld. CIT(A)-I has erred in law and in holding that claim of set off of unabsorbed depreciation / loss made in the return of income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he same to GCI. However, the exact amounts of the same were to reimburse the same to GCI. However, the exact amount of the same was not known till the date GCI raised a debit note on the assessee for such reimbursement. 4. It is a well established accounting policy as per AS-16 issued by ICAI that any expenditure incurred in relation to creation of a capital asset should be capitalized to the relevant asset. The same can be inferred from the Notes forming part of accounts, that the company also capitalizes the amount spent for setting up of the plants to the respective plants account. Accordingly, in the F.Y.2006-07 when assessee received debit notes for such reimbursement, it capitalized this amount ofRs.1,42,66,483/- as plant and machi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ailed to reduce the amount of reimbursement from cost of asset. In this way the assessee company claimed the following excess depreciation. Plant Machinery (Anhydrous TTC Plan 1-Apr.06 Rs.99,66,564 Plant Machinery (Pilot Plant AA Lab) 1-Apr.06 Rs. 14,76,613 Plant Machinery (MOR Plant) 1-Apr.06 Rs. 28,23,306 Rs. 1,42,66,483 11.This resulted excess depreciation of 21,39,973 (15% of Rs. 1,42,66,483 ) was claimed by the assessee which is disallowed and added back to the total income of the assessee and made addi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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