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TMI Blog2023 (1) TMI 1428X X X X Extracts X X X X X X X X Extracts X X X X ..... tallments and as per accounting standard-7, income can be recognised only when its realisation is certain. In our view, there is merit in this legal contention also. This addition could not have been made by the AO. Decided in favour of assessee. Disallowance of expenses - We noticed that the assessee does not have explanation for the expenses other than interest expenditure. Hence, disallowance of other expenses made by the AO is required to be confirmed. With regard to interest expenditure we noticed that a sum is the interest payable to Scheduled banks. Admittedly the assessee has not made payment and hence the same is required to be disallowed under section 43B of the I.T. Act. On this count, the interest expenditure payable to the bank is the liable to be disallowed. With regard to the remaining amount of interest of Rs. 10.05 lakhs, the assessee does not have any detail. CIT (A) was justified in confirming disallowance of entire expenses and his decision does not call for any interference. Accordingly we confirm the order passed by the learned CIT (A) on this issue. Disallowance of depreciation - addition it related to sale and leased back transaction - HELD THAT:- The propos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 20.10.2022 passed by the learned CIT(A)-National Faceless Appeal Centre, Delhi and it relates to A.Y. 2002-03. Original grounds of appeal and additional ground of appeal raised by the assessee are related to the following issues : a) Addition of lease rental accrued - Rs. 24.60 lakhs b) Disallowance of expenses - Rs. 1.44 crore c) Disallowance of depreciation - Rs. 4.26 lakhs d) Addition of increase in liability - Rs. 1.16 crore e) Non-granting to set off of brought forward losses. 2. The assessee is engaged in the finance and leasing business. The present assessment was completed by the Assessing Officer under section 144 read with section 254 of the I.T. Act, since the entire assessment was restored to the file for AO for framing assessment afresh. The Assessing Officer was constrained to complete the assessment to the best of his judgment since the assessee did not cooperate with the Assessing Officer. Accordingly he completed the assessment by determining total income at Rs. 1,39,14,000/-, as determined in the earlier assessment order dated 30.3.2005. The appeal filed by the assessee before the learned CIT (A) was partly allowed. Still aggrieved the assessee h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... We noticed the auditor has given very same note in his report given for the year ending 2000 & 2001. Accordingly, there may be merit in the submission of learned AR that the note given by auditor during the year under consideration may be a case of inadvertent error committed in inclusion of the note relating to earlier years. This view is further reinforced for the fact that the agreement with M/s. Datar Switchgear Ltd. has expired in August, 2000 itself and the other agreement has expired in April, 2001. When the agreement expires, the assessee may not getting right to receive the income. In any case, it is the submission of the assessee that both the assets have been classified as non-performing assets. It is the submission of the assessee that these assets have been classified as non-performing assets due to default in receiving installments and as per accounting standard-7, income can be recognised only when its realisation is certain. In our view, there is merit in this legal contention also. Accordingly both on merits as well as on legal point, we are of the view that this addition could not have been made by the Assessing Officer. Accordingly, we set aside the order passed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sons, then depreciation is not required to be disallowed. He submitted that this view has been expressed by the Coordinate Bench in assessee's own case in ITA No. 2826/Mum/2017 and CO No. 247/Mum/2018 dated 28.9.2018. The Learned AR submitted that the above said depreciation relates to an asset which was purchased from one party and leased out to another party. Accordingly, he prayed that the disallowance of depreciation be deleted. 14. We heard Ld DR on this issue and perused the record. The proposition expounded by the Coordinate Bench in assessee's own case in ITA No. 2826/Mum/2017 relating to A.Y. 1997-98 is that the disallowance of depreciation on assets, where seller of the assets and lessee are different is not required to be made. However, it is not discernible from the record that the assets on which depreciation was disallowed fall under the above said category. Accordingly, we set aside this issue to the file of the Assessing Officer with the direction to examine the nature of asset. If he finds that the seller of the asset and lessee are two different persons, then no disallowance of the depreciation is called for 15. The Next issue relates to the addition of liabilit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee filed a rectification petition under section 154 of the Act requesting the Assessing Officer to grant set off of brought forward losses. However, the Assessing Officer, vide its order dated 27.1.2006, rejected the rectification petition filed by the assessee. Hence the assessee filed appeal before the learned CIT (A) challenging the order passed by the AO u/s 154 of the Act. He submitted that the learned CIT (A) has since disposed of the appeal, vide its order dated 27.7.2006 passed in F.No.CIT(A)-I/IT/240/05-06/32 directing the Assessing Officer to allow set off of brought forward losses after verifying the past records. The Learned AR submitted that the Assessing Officer has not given effect to this order of the learned CIT (A) till date and hence the assessee has raised an additional ground seeking direction from the bench to the AO to allow set off of brought forward losses. He submitted that it is only a legal ground and the AO is required to grant set off of brought forward losses as per law. Accordingly he prayed that the Assessing Officer may be directed to give effect to this order of the learned CIT(A). 20. The Learned DR submitted that the assessee is raising this ..... X X X X Extracts X X X X X X X X Extracts X X X X
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