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TMI Blog2024 (5) TMI 348X X X X Extracts X X X X X X X X Extracts X X X X ..... ofit by way of disallowance of depreciation would be eligible for deduction u/s. 80IAB and this position is now set at rest by CBDT Circular No. 37/2016 dated November 2, 2016, wherein the CBDT has accepted that if disallowance leading to enhancement in the profits of eligible business, then deduction under Chapter-VIA of the Act is admissible on the profits so enhanced by the disallowance. Accordingly, we direct the Assessing Officer to allow the deduction u/s. 80IAB on the disallowance of depreciation and gave consequential relief. In view of our aforesaid direction, the issue raised on merits on allowability of depreciation on intangible assets is purely academic - Appeal of the assessee is allowed. - Ms. Madhumita Roy, Judicial Member ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Rs. 85,17,815/- (358,94,000 - 89,73,500 - 67,30,125 - 50,47,593 - 37,85,695 - 28,39,272)which comes to Rs. 21,29,453/-. 3. Such claim, however, has been rejected by the AO on the count that right to use water neither diminishes nor enhances by any means. The Government has just given a facility to the assessee to use the same and the assessee has clearly tried to claim the depreciation on the same, this cannot be allowed against the taxable income to reduce the same. 4. The payment cannot be considered to be on account of acquisition of capital asset and, therefore, no depreciation has been found to be allowed. 5. At the time of hearing of instant appeal the Ld. Counsel appearing for the assessee submitted before us that in the event the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Limited (ULL). It has developed a sector specific Special Economic Zone ('SEZ) for chemicals in Bharuch district of Gujarat. The SEZ for chemical products is conceptualized as a world-class industrial park, meeting all requirements of the chemical sector. The sector specific SEZ was developed with all utilities/ facilities required for the operation of chemical plants keeping the environmental management as the focal point. For Assessment Year ('AY) 2013-14, the Appellant filed its return of income on November 27, 2013 declaring taxable income of Rs. 17,40,660 after claiming deduction u/s 80IAB of the Act. The Appellant had also declared book profit of Rs. 13,78,64,397 u/s 115JB of the Act on which taxes were paid. It has made a on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ention of the assessee that the amount of depreciation disallowed should be allowed u/s. 80IAB of the Act is not acceptable. 4. Before us, ld. counsel submitted that in ground no.2 which relates to non allowance of deduction u/s. 80IAB on the amount of depreciation disallowed and if this ground is held to be allowable, then ground no.1 will become purely academic. In other words, if the depreciation is disallowed, then assessee is eligible for claim of deduction u/s. 80IAB on the amount of income enhanced by the Assessing Officer due to disallowance of depreciation on tangible assets, and now such an allowability of enhanced disallowance is now covered by CBDT Circular No. 37/2016 dated November 2, 2016, wherein the CBDT has accepted that i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ordingly, we direct the Assessing Officer to allow the deduction u/s. 80IAB on the disallowance of depreciation and gave consequential relief. In view of our aforesaid direction, the issue raised on merits on allowability of depreciation on intangible assets is purely academic. Hence, no separate adjudication is required. Ground No.3 is purely consequential in nature and specific adjudication is required. Accordingly, the appeal of the assessee is allowed. 8. In the result, the appeal of the assessee is allowed. 8. Under the facts and circumstances of the case we find that the issue is squarely covered in assessee s own case as mentioned hereinabove and, therefore, respectfully relying upon the same we grant relief to the assessee allowing ..... X X X X Extracts X X X X X X X X Extracts X X X X
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