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Income Tax Appellate Tribunal, ‘’D’ ’BENCH, AHMEDABAD
Before: SHRI WASEEM AHMED
आयकर अपील�य अ�धकरण, अहमदाबाद �यायपीठ IN THE INCOME TAX APPELLATE TRIBUNAL, ‘’D’ ’BENCH, AHMEDABAD BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER And MS MADHUMITA ROY, JUDICIAL MEMBER आयकर अपील सं./ITA No.688/AHD/2015 �नधा�रण वष�/Asstt. Year: 2011-2012 Gujarat Alkalies and Chemicals Ltd., D.C.I.T., Near IPCL Complex, Circle-1(1), Vs. Baroda-390007. P.O Petrochemicals, at Ranoli, Dist. Baroda-391346.
PAN: AAACG8896M आयकर अपील सं./ITA No.937/AHD/2015 �नधा�रण वष�/Asstt. Year: 2011-2012 D.C.I.T, Gujarat Alkalies and Chemicals Ltd., Circle-1(1), Near IPCL Complex, Vs. Baroda-390007. P.O Petrochemicals, at Ranoli, Dist. Baroda-391346.
PAN: AAACG8896M
(Applicant) (Respondent) : Assessee by Shri Sunil Talati, A.R : Revenue by Shri Mahesh Kumar, CIT.DR सुनवाई क� तार�ख/Date of Hearing : 29/01/2019 घोषणा क� तार�ख /Date of Pronouncement: 25/02/2019 आदेश/O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER:
The captioned cross-appeals have been filed at the instance of Assessee and Revenue against the common order of the ld. CIT(A) vide appeal
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No.CAB-1/87/2014-15 dated 30/01/2015 arising in the matter of assessment order passed under s.143(3) of the Income Tax Act, 1961 (here-in-after referred to as "the Act") relevant to Assessment Year (AY) 2011-12.
First, we take up ITA No. 688/Ahd/2015 for A.Y. 2011-12, an appeal by the assessee. The assessee has raised the following grounds of appeal: ‘’Your appellant being dissatisfied with the order passed by the Hon'ble Commissioner of Income Tax(Appeals)-! Baroda, u/s 143(3) of the Act, dated 30.01.2015 received by us on 19.02.2015, presents this appeal against the said order on the following amongst other grounds: 1. The order passed by the Hon'ble Commissioner of Income Tax(Appeals)-! Baroda, is bad in law, contrary to legal pronouncement and same be quashed. The additions/disallowances confirmed by the Hon'ble Commissioner of Income Tax(Appeals)-! Baroda, are unwarranted and unjustified. It be held so now and same be deleted. 2. The Hon'ble Commissioner of Income Tax(Appeals)-! Baroda, has erred in confirming Rs. 2,32,000 /- treating the same as Prior Period Expenses without appreciating the fact that the appellant has already added back the same while computing the taxable income. This addition amounts to duplication of the addition to the income. It is therefore submitted that there is no justification to confirm the addition made by the AO. It is also submitted that The Hon'ble CIT(A), Baroda has wrongly considered this ground under the MAT provision which is not the subject matter of this ground. It is therefore submitted that the directions given y Hon'ble CIT(A), Baroda is unwarranted. Without prejudice to the above it is submitted that the liability has been crystallized and quantified during the year. Hence the addition made by the AO and confirmed by the CIT(A)-I, Baroda is not justified . It be held so now and same be deleted. 3. The Hon'ble CIT(A)-I, Baroda has erred in confirming the addition made by the learned AO of Rs. 2,32,0007- being prior period income shortly disclosed by the appellant as per AO. Your appellant submits that the same is wrongly added back. The same be deleted now. 4. The Hon'ble CIT(A)-I, Baroda has erred in directing the AO to delete the addition subject to verification and if there is increase in profit then to that extent the same is confirmed. Your appellant submits that there is no provision to make any addition on account
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of unutilized MODVAT Credit of Rs. 5,31,03,2507-. It be held so now and the AO be directed to delete the addition made in this behalf.
The Hon'ble Commissioner of Income Tax(Appeals)-! Baroda, has erred in confirming deduction of Rs. 47,91,81,0007- claimed u/s 80IA of the Act. Your appellant submits that the necessary books of accounts have been maintained and all conditions laid down u/s 80IA are fulfilled. Hence there is no justification to confirm your appellant's claims by adopting the market rate of units other than rate adopted by your appellant. It is therefore submitted that the deduction u/s 80IA is rightly claimed by your appellant and hence the same be allowed now. 6. The Hon'ble Commissioner of Income Tax(Appeals)-! Baroda, has erred in re-computing book profit u/s 115JB of the Act and increasing 'book profit' by making adjustment for notional expenditure incurred for earning the exempted income by invoking provisions of section 14A of the Act. 7. The Hon'ble Commissioner of Income Tax(Appeals)-! Baroda, has erred in charging the interest u/s 234B/234C of the Act. It be held so now and same be deleted. Your appellant craves for leave to alter/amend/withdraw/modify any of the above grounds and/or to add any ground before hearing.’’
The interconnected issued raised by the assessee in the ground no. 1 to 3 is against the disallowance of Rs. 2.32 lacs on account of prior period expenses under the provisions of normal as well as MAT computation of income.
Briefly stated facts are that the assessee is a limited company and engaged in the business of manufacturing and trading of chemicals and generation of power.
The AO during the assessment proceedings found that the assessee has claimed prior period expenses of Rs. 2.32 lacs which are not allowable as a
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deduction under normal provision and MAT computation of income. Accordingly, the AO disallowed the same and added to the total income of the assessee determined under normal as well as MAT computation of income.
Aggrieved assessee preferred an appeal to Ld. CIT(A). The assessee before Ld. CIT(A) submitted that the prior period expenses of Rs. 2.32 lacs has already added in the computation of income prepared under normal and MAT provision of the Act. Accordingly, the assessee claimed that further disallowance/addition of prior period expenses would lead to double addition to the total income of the assessee.
However, the ld. CIT(A) disagreed with the contentions of the assessee and confirmed the order of the AO.
Being aggrieved by the order of the Ld. CIT(A), both the assessee and Revenue are in appeal before us.
The Ld. AR, before us, submitted that the amount of prior period expenses has already disallowed while computing income under the normal provision of the Act.
9.1 The Ld. AR also submitted that under MAT computation of income the adjustment could be made in respect of the item as specified under section 115JB of the Act. As such, there is no provision u/s 115JB of the Act which requires for making the addition of the prior period expenses claimed by the assessee in its financial statement.
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On the other hand Ld. DR vehemently supported the order of authorities below. Both the parties relied on the order of authorities below as favorable to them.
We have heard the rival contentions and perused the materials available on record. The AO in the instant case has disallowed the prior period expenses amounting Rs. 2.32 lacs while computing income under normal and MAT provision of the Act on the ground that prior period expenses cannot be allowed as a deduction against the current year income. The Ld. CIT(A) subsequently confirmed the view taken by the AO.
11.1 Regarding the normal computation of income, a specific query was raised from the Bench to the Ld. AR, to substantiate his claim that the prior period expenses were added in the computation of income. But the Ld. AR failed to substantiate his claim by any documentary evidence. However, the Ld. AR, before us, pleaded that the matter could be remanded back to the AO for the limited purpose of verifying whether the assessee has made disallowance of prior period expenses in the computation of income.
11.2 The Ld. DR, did not raise any objection if the matter is restored to the AO for verification as discussed above.
11.3 Thus in the interest of Justice and fair play we are inclined to restore the impugned issue to the file of AO to verify whether the assessee has made the disallowance of prior period expenses amounting to Rs. 2.32 lacs under normal computation of income and accordingly adjudicate the issue afresh as per the provisions of Law.
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11.4 Regarding the computation of income under the provisions of MAT, we note that the assessee has to take the profit as shown in its financial statement prepared as per the prescribed schedule under the Companies Act and make the addition and subtraction only of those items specified u/s 115JB of the Act. As such, there is no mention under the provision of MAT for making any adjustment on account of prior period expenses.
11.5 On a specific query from the bench to the Ld. DR, regarding the claim of prior period expenses while computing book profit under section 115JB of the Act. The Ld. DR, has not advanced any argument on this aspect. Therefore, we are not inclined to concur with the view of the Ld. CIT(A). Accordingly, we reverse the order of the authorities below and direct the AO to delete the addition made by him while computing book profit u/s 115JB of the Act. Hence the ground of appeal of the assessee is partly allowed for statistical purpose, and the ground of appeal of the Revenue is dismissed.
The second issue raised by the assessee in the ground no. 4 is that the Ld. CIT(A) erred in directing the AO to delete the addition after verification whether there is an increase in the amount of profit on account of MODVAT credit.
The assessee in its balance sheet as on 31/03/2011 has shown unutilized MODVAT credit of Rs. 5,31,03,250/- only. The assessee claimed to have followed an exclusive method of accounting regarding its transaction relating to purchase and sale. Therefore, the amount of unutilized MODVAT credit was not included in the closing stock shown as on 31/03/2011.
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However, the AO was of the view that the assessee is under obligation to include the amount of MODVAT credit in the closing stock of the goods as on 31/03/2011 as per the provision of section 145A. Accordingly, the AO concluded that there is a contravention in complying the provision of section 145A of the Act by the assessee. Hence, the AO added the sum of Rs. 5,31,03,250/- being unutilized MODVAT credit to the closing stock of the goods as on 31/03/2011 which resulted in enhancement of total income of the assessee.
Aggrieved assessee preferred an appeal to Ld. CIT(A) who has partly allowed relief to the assessee by observing under:
‘’10.13 In view of above discussion as well as decisions of Hon'ble Courts, it is held that the AO is not correct in increasing only the amount of closing stock by the unutilized amount of CENVAT credit. The AO is required to include the excise duty element in the cost of purchases, sales and opening stock. The AO is accordingly directed to make adjustment in the values of opening stock, purchases as well as sales also and compute the net addition or relief to the appellant as the case may be. As per the AR of the appellant it is mentioned by the auditor in the audit report that there is no impact on the profit if net method (i.e. exclusive method) is followed. In view of this the AO is directed to verify from the audit report and relevant record of the appellant and find out whether as a result of following Inclusive Method as perfection 145A of the Act there is any impact on the net profit in its case for the year under consideration. If there is no impact on the net profit of the appellant as a result of following Inclusive Method (i.e. by including tine Cenvat in the opening stock, purchases, sales and closing stock), then the AO is directed to delete the addition of Rs. 5,31,03,250/-. However, if there is increase in the profit in the case of appellant as a result of following such Inclusive Method then the profit to the extent so increased is confirmed. Thus, the ground of appeal no. 9 of the appellant is disposed off accordingly.’’
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Being aggrieved by the order of ld. CIT(A) assessee is in appeal before us. The ld. AR, before us, submitted that the assessee is maintaining its accounts as per the exclusive method of accounting which has been recognized by the Institute of Charted Accountant of India.
16.1 There was no change in the method of valuation of closing stock in comparison to the earlier years. As such the assessee is following its method of valuation of closing stock consistently. Moreover, closing stock one year becomes the opening stock of the subsequent year. Accordingly, there will not be any effect on the amount of profit declared by the assessee over a period of time.
16.2 There will also not be any impact on the profitability/ total income of the assessee. It is because if the amount of unutilized MODVAT credit is added in the value of closing stock as on 31/03/2011, then there shall also be a corresponding increase in the value of purchases and opening stock in the proportion of MODVAT credit amount. Thus the entire exercise of including the unutilized MODVAT credit in the closing stock of the assessee will be futile.
On the other hand Ld. DR vehemently supported the order of the authorities below.
We have heard the rival contentions and perused the materials available on record. The allegation of the Assessing Officer in the instant case is that the assessee while valuing the closing stock of its goods as on 31/03/2011 has not included the amount of MODVAT which is contrary to the provisions of section 145A of the Act. Therefore, the closing stock of the assessee was
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enhanced by the amount of MODVAT as discussed above. The Ld. CIT(A) also confirmed the addition made by the Assessing Officer.
18.1 From the preceding discussion, we note that the assessee has been recording its transactions of purchase, sales, and valuation of inventories, net of MODVAT consistently. Thus, if the inventory of closing stock is enhanced by the amount of MODVAT credit attributable to it, then the amount of corresponding purchases should also be increased by the said amount which will result in tax neutral exercise. Thus, in our considered view, the Assessing Officer erred in enhancing the value of closing stock without giving effect to the purchases. In this regard, we find support and guidance from the judgment of Hon’ble Gujarat High Court in the case of Pr.CIT vs. Gujarat Gas Company Ltd. In Tax Appeal No.90 of 2017 vide order dated 07/02/2017, wherein it was held as under:-
“3.03. Now, so far as question No. [B] i.e. with respect to addition made by the A.O. on account of unutilized modvat/cenvat credit of Rs. 56,08,089/- is connected, it is required to be noted that the learned tribunal has taken note that with respect to modvat receivable account, there is corresponding less debit to the purchase account and hence to that extent there is already income offered for tax. If that be so, there was no question of further adding modvat/cenvat credit to the income of the assessee for the year under consideration. Under the circumstances, we see no reason to interfere with the impugned judgement and order passed by the learned tribunal so far as confirming the order passed by the learned CIT(A) deleting the addition made by the A.O. on account of unutilised modvat/cenvat credit of Rs. 56,08,089/-. We are in complete agreement with the view taken by the learned tribunal.”
18.2 There is no ambiguity that the assessee has been following the exclusive method of accounting. Thus, we can safely conclude that though the assessee is following the exclusive method of accounting which is contrary to the provisions of section 145A of the Act, but the effect of the
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same will remain NIL. Thus, there cannot be any fault of the assessee merely on the reasoning that the assessee has not valued its closing stock as per the provisions of section 145A of the Act in the given facts & circumstances.
In view of the above, we do not concur with the view of the Ld. CIT(A) and accordingly reverse the same. The AO accordingly is directed to delete the addition made by him. Hence, the ground of appeal of the assessee is allowed.
The next issue raised by the assessee in the ground no. 5 is that ld. CIT(A) erred in confirming the order of the AO by denying deduction claimed by the assessee u/s 80IA(4) of the Act for Rs. 47,91,81,000/-
The assessee has claimed deduction u/s 80IA(4) of the Act for Rs. 47,91,81,000/- in respect of its power generation unit.
However, the AO was of the view that the assessee was not eligible for deduction in respect of its power generation unit u/s 80IA(4) of the Act for the following reasons;
The power generated by the assessee was shown as captive consumption.
Without prejudice to the above, the sale price shown by the assessee at Rs. 4.4471 per unit was on the higher side. In fact, the Gujarat State Electricity Corporation Limited was selling power at the rate of Rs. 3.04 power unit. Therefore, the AO was of the view that assessee should have taken the sale price of its power generation
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used for captive consumption at the rate of 3.07 power unit which will result in a loss to the assessee. Accordingly, there was no question of claiming the deduction u/s 80IA(4) of the Act.
In view of the above, the AO disallowed the deduction claimed by the assessee for Rs. 47,91,81,000/- and added to the total income of the assessee.
Aggrieved assessee preferred an appeal to Ld. CIT(A) who has confirmed the order of the AO by observing as under: “11.3 The reasons as mentioned by the AO in the assessment order for making disallowance of claim of deduction of Rs. 47.91 crore u/s 80IA as well as above entire submission of the appellant have been considered. As regards the stand of the AO that the appellant having captive power plant is not eligible to claim deduction u/s 80IA, it is mentioned that the similar issue was involved in the case of appellant for AY 2009-10 and for AY 2008-09 also. The then Ld. CIT(A)-I, Baroda (i.e. my predecessor) vide his appeal order in appeal no. CAB-I/283/ilnl2 dated 31/08/2012 has decided the above issue in favour of appellant in respect of AY 2009-10. In view of the reasons as mentioned by the then Ld. CIT(A)-I, Baroda in para 7.2 of his appeal order dated 31/08/2,012 in respect of AY 2009-10, for the year under consideration also it is held that deduction u/s 80IA(4) is available to the appellant in respect ,of electricity generated by it for captive consumption, subject to fulfillment of other conditions u/s 80IA. 11.4 Regarding issue related to sale price to be adopted for computing profits derived by captive power plant, it is mentioned that this issue is fully covered by decision of the then Ld. CIT(A)-I, Baroda in appellant's own case in AY 2008-09. The then Ld. CIT(A)-I, Baroda (i.e. my predecessor) in his appeal order in appeal no. CAB-I/25/10-11 dated 03/11/2011 has held that the AO is justified in rejecting, market value of electricity captively consumed to be rate charged by DGVCL (for Dahej complex) and MGVCL,(for Baroda complex). This decision of Ld. CIT(A)-I, Baroda in respect of;|\Y 2008-09 has been reproduced by the AO in his assessment order for the year under Consideration. I agree with the decisions of Ld. CIT(A)-I, Baroda as given by him in above appeal order dated 03/11/2011 for A.Y 2008-09. Facts of the case being similar for the year under consideration also, it is held (that the AO was justified in rejecting market value of electricity captively consumed to be rate charged by DGVCL and MGVCL. The AO is directed to instead adopt market value
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for the electricity units actually sold by the appellant to be the actual rate and for electricity units captively consumed to be average rate of purchase of power by GUVNL during FY 2010-11 from various generating companies i.e. Rs. 3.07 per unit. The assessing officer would accordingly recomputed the profit of eligible undertakings for the purpose of section 80IA(4). Since the same would still work out to be loss figure, no deduction under 80IA(4) would be allowed to the appellant for the year under consideration also. Further, the loss so computed of CPPs would be carried forward and set off against deduction claimed under section 80IA.” 23. Being aggrieved by the order of the ld. CIT(A) assessee is in appeal before us. The ld. AR before us submitted that the Hon’ble Jurisdictional High Court had adjudicated the identical issue in the own case of the assessee in its favor in tax appeal no.708/2016.
On the other hand ld. DR vehemently supported the order of the authorities below.
We have heard the rival contentions and perused the materials available on records. At the outset, we find that the issue has already been adjudicated by the Jurisdictional High Court in favor of the assessee as discussed above. The relevant extract of the order is reproduced below:
“3. Since both the issues are covered by various judgments of this Court, we do not find it necessary to record facts at any length. Division Bench of this Court by judgment dated 22.11.2011 in Tax Appeal No.2092/2010 in somewhat similar controversy observed as under "3. With respect to Question [B], the issue pertains to sub Section (8) of Section 80IA of the Income Tax Act, 1961. The assessee had a CPP Unit generating electricity, which was supplying it to a general unit. The electricity generated is being supplied to other consumers also. The CPP unit charged Rs. 5.40 ps. per unit from the general unit. The Assessing Officer applying sub-Section (8) of Section 80IA restricted the same to Rs. 5.32 ps. per unit and, thereby, restricted the deductions claimed by the assessee under Section 80IA of the Act. This restriction was primarily on the basis that the rate of Rs. 5.40 ps. charged by Gujarat Electricity Board (" GEB" for short) was inclusive of 8 paise per
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unit of electricity duty. This component of electricity duty the Assessing Officer discarded for the purposes of ascertaining market value of the electricity generated by the CPP Unit and supplied to its general unit. 4. CIT (Appeals) confirmed the view of the Assessing Officer on the same line of reasoning. The Tribunal, however, on further appeal by the assessee, reversed the orders passed by the Revenue authorities referring to and relying upon the decisions of other Tribunals. The Tribunal was of the opinion that the market value of the electricity supplied by the CPP Unit to the general unit would be the same being charged by GEB from the consumeRs. 5. Counsel for the Revenue contended that the component of 8 paise per unit was the electricity duty which GEB was not authorized to retain but had to pass on to the Government. In essence, GEB was only collecting 8 paise per unit as electricity duty for and on behalf of the Government. He submitted that the market value of the electricity should be reckoned on Rs. 5.32 ps. per unit as was done by the Revenue authority. 6. Under sub-Section(8) of Section 80IA of the Act, if it is found that where any goods or services held for the purposes of the eligible business are transferred to any other business carried on by the assessee or where any goods or services held for the purposes of any other business carried on by the assessee are transferred to the eligible business and in either case the consideration for such transfer does not correspond to the market value of such goods as on the date of the transfer, then for the purposes of deduction under Section 80IA in case of the eligible business as if the transfer had been made at the market value of such goods or services. It is in this context that the question of substituting the actual consideration by the market value comes into picture. 7. We may notice that the Tribunal did not accept the contention of the assessee that the electricity is neither goods nor services and that, transfer of electricity, therefore, would not be covered under sub-Section (8) of Section 80IA of the Act. However, in so far as the Tribunal's reasoning to adopt the market value of the goods at Rs. 5.40 ps. per unit is concerned, we find no error. Undisputedly, GEB supplied the electricity to its consumers at the same rate. This, therefore, was a market value of the electricity supplied by the CPP Unit to the general unit. The fact that this amount of Rs. 5.40 ps. comprises of a component of 8 paise, which was electricity duty, to our mind, would make no difference in so far as the market value is concerned. To a consumer, the price being paid remains 5.40 ps. per unit. The fact that the seller retains only Rs. 5.32 ps. out of the said collection and passes on 8 paise per unit to the Government in the form of electricity duty, to our mind, would make no difference. This question is, therefore, not required to be considered." 4. This was followed in case of CIT v. Shah Alloys Ltd. in Tax Appeal No. 2093/2010. This was reiterated in Tax Appeal No.1646/2010 in case
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of ACITv. Pragati Glass Works (P.) Ltd. (order dated 30.1.2012), in which following observations were made "7. To our mind, Tribunal has committed no error. Assessing Officer and CIT (Appeals) while adopting Rs. 4.51 per unit as the value of electricity generated by eligible unit of assessee and supplied through its non eligible unit only worked out cost of such electricity generation. In fact CIT(Appeals) in terms recorded that Rs. 4.51 was computed as the reasonable value of the electricity generated by eligible unit of assessee. This amount included Rs. 4.17 per unit which was the cost of electricity generation and Rs. 0.34 per unit which was duty paid by the assessee to GEB for such power generation. Thus the sum of Rs. 4.51 per unit only represented the cost of electricity generation to the assessee. In Section 80IA(8) of the Act what is required to be ascertained is the market value of the goods transferred by the eligible business, when such transfer is by eligible business to another non eligible business of the same assessee and the consideration recorded in the accounts of the eligible business does not correspond to market value of such goods. Term "Market Value" is further explained in explanation to said sub-section to mean in relation to any goods or services, price that such goods or services will ordinarily fetch in the open market. To our mind sum of Rs. 4.51 per unit of electricity only represented cost of electricity generation to the assessee and not the market value thereof. It is not in dispute that the GEB charged Rs. 5 per unit for supplying electricity to other industries including non eligible unit of the assessee itself. Tribunal therefore, while adopting the said base figure and excluding excise duty therefrom to work out Rs. 4.90 as the market value of the electricity generated by the assessee, to our mind, committed no error. It can be easily seen that if the assessee were to supply such electricity or was allowed to do so in the open market, surely it would not fetch Rs. 4.51 per unit but Rs. 5 per unit as was being charged by GEB. Since the excise duty component thereof would not be retained by the assessee, Tribunal reduced the said figure by the nature of excise duty and came to the figure of Rs. 4.90 to ascertain the market value of electricity generated by the eligible unit and supplied to non eligible business of the assessee. No error was committed by the Tribunal. No question of law therefore, arises. Tax Appeal is dismissed." 5. Issue once again reached the Division Bench of this Court in case of CIT v. Alembic Ltd. in Tax Appeal No.471/2009 and connected appeals. The Division Bench referring to earlier judgments of the Court held as under : "11. We have considered the submissions made by the learned counsel for the parties. We have also considered the case laws cited by the learned counsel for the assessee. Taking into consideration the judements of this court and other High Courts, cited above, we are of the opinion that the Tribunal has rightly allowed the claim of the assessee. In that view of the matter, we do not find any infirmity in the order of the Tribunal. Therefore, we answer question (C) and (D) in favour of the assessee and against the revenue."
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Issues are thus considered on number of occasions by the Court and held against the Revenue. Questions are answered against the Revenue. Both the tax appeals are therefore, dismissed.”
25.1 As the issue is covered in favor of the assessee by the Hon’ble Jurisdictional High court as discussed above. Thus respectfully following the same we reverse the order of Ld. CIT(A) and direct the AO to delete the addition made by him. Hence the ground of appeal of the assessee is allowed.
The last issue raised by the assessee in the ground no. 6 is that the Ld. CIT(A) erred in making the addition of the disallowances made u/s 14A of the Act while computing book profit u/s 115JB of the Act.
The assessee in the year under consideration has shown exempted income amounting to Rs. 7,80,28,458/- and Rs. 71,16,003/- which was claimed as exempt income u/s 10(34) and the proviso to section 28(va)(ii) respectively.
27.1 The assessee while determining income under the normal computation of the income has made the disallowance of Rs. 2,14,40,870/- as per the provision of section 14A r.w Rule 8D of Income-tax Rule. However, the assessee did not make any disallowance of the expenses in the computation of book profit as per the section 115JB of the Act.
The AO was of the view that the expenditure incurred in relation to the exempted income needs to be disallowed as per the clause ‘’f’’ of explanation 1 to section 115JB of the Act. Therefore, the AO has made disallowance of
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the expenses which were disallowed under section 14A r.w Rule 8D while determining the income under MAT provisions.
Aggrieved assessee preferred an appeal to Ld. CIT(A) who has confirmed the order of the AO by observing as follows: “12.2 The reasons as mentioned by the AO in the assessment order for re- computing books profit' u/s 115JB of the Act and increasing book profit by adding expenditure incurred for earning exempted income u/s 14A of the Act of Rs. 2,14,40,870/- as well as above submission of the appellant have been considered. In this regard, it is mentioned that the book profit u/s 115JB is computed as per explanation (1) to subsection (2) of section 115JB. A bare perusal of clause (f) of explanation (1) makes it that the) amount of expenditure relatable to any exempt income, other than section 10(30), is liable to be added back to net profit as shown in the P&L account As per section 14A it transpires that it talks of disallowing any expenditure incurred in relation to income not includible in the total income. The expression in relation to used for making disallowance under section 14A has been employed in Explanation (1) to section 115JB(2) as expenditure relatable to', in more or less the/same form. It is manifest that the amount of dividend is exempt under section 10(33)/[not section 10(3) of the Act]. Thus, any expenditure relatable to' the exempt dividend income would fall under clause (f). The Explanation 1, which provides in unequivocal terms that the amount of expenditure relatable to' exempt income shall be added back. Neither the language of clause (f) expressly refers to the amount specifically debited to the profit and loss account nor there can be an implication in this regard. What has been contemplated by the provision is the amount of the expenditure relatable to' exempt income. Further, the amount disallowable 'under section 14A is always part of the expenses specifically debited to the profit and loss account. It is axiomatic that unless any expenditure is incurred arid claimed as deduction, there can be no question of any hypothetical disallowance under section 14A. In this regard the support is drawn from the decision of Hon'ble ITAT, Mumbai Bench 'D', 37 Taxmann.com 128. In view of this the above ground of appeal no. 11 the appellant is dismissed.’’ 30. Being aggrieved by the order of the Ld. CIT(A) assessee is in appeal before us.
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The Ld. AR, before us, submitted that the amount disallowed under normal computation of income in relation to exempted income cannot be imported while determining the book profit u/s 115JB of the Act.
On the other hand Ld. DR submitted that the disallowance needs to be made as per clause ‘’f’’ of explanation 1 to section 115JB of the Act in relation to exempted income. Therefore the AO has rightly disallowed the amount of Rs. 2,14,40,870/- while determining book profit u/s.115JB of the Act.
We have heard the rival contention and perused the materials available on record. It is settled law that the amount of disallowance made by the AO u/s 14A of the Act cannot be imported while determining the profit u/s 115JB of the Act. In this regard, we rely on the judgment cited by the ld AR for the assessee in the case of Alembic Ltd. in Tax Appeal No.1249/2014.
33.1 We also note that in the recent judgment of Special Bench of Hon’ble Delhi Tribunal in the case of ACIT vs. Vireet Investment Pvt. Ltd. reported in 82 Taxmann.com 415 has held that the disallowances made u/s 14A r.w.r. 8D cannot be the subject matter of disallowances while determining the book profit u/s 115JB of the Act. The relevant portion of the said order is reproduced below: “In view of above discussion, the computation under clause (f) of Explanation 1 to section 115JB(2), is to be made without resorting to the computation as contemplated under section 14A, read with rule 8D of the Income-tax Rules, 1962.”
33.2 The ratio laid down by the Hon’ble Tribunal is squarely applicable to the facts of the case. Thus it can be concluded that the disallowance made
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under section 14A r.w.r. 8D cannot used while determining the expenses as mentioned under clause (f) to explanation 1 to section 115JB of the Act.
33.3 However, in our considered view the disallowance needs to be made as per Clause (f) to Section 115JB of the Act independently. The judgment of Hon’ble Gujarat High Court relied on by the ld AR in the case of Alembic Ltd. (supra), does not deny to make the disallowance as per clause (f) u/s 115JB of the Act.
33.4 Thus it is clear that the disallowance needs to be made in terms of the provisions of clause (f) to section 115JB of the Act while determining the book profit. In holding so, we draw our support from the judgment of Hon’ble Calcutta High Court in the case of CIT Vs. Jayshree Tea Industries Ltd. in GO No.1501 of 2014 (ITAT No.47 of 2014) dated 19.11.14 wherein it was held that the disallowance about exempted income needs to be made as per the clause (f) to Explanation-1 of Sec. 115JB of the Act independently. The relevant extract of the judgment is reproduced below:- “We find computation of the amount of expenditure relatable to exempted income of the assessee must be made since the assessee has not claimed such expenditure to be Nil. Such computation must be made by applying clause (f) of Explanation 1 under section 115JB of the Act. We remand the matter for such computation to be made by the learned Tribunal. We accept the submission of Mr. Khaitan, learned Senior Advocate that the provision of section 115JB in the matter of computation is a complete code in itself and resort need not and cannot be made to section 14A of the Act.” Given above, we hold that the disallowances made under the provisions of Sec. 14A r.w.r. 8D of the IT Rules, cannot be applied to the provision of Sec. 115JB of the Act as per the direction of the Hon'ble Calcutta High Court in the case of CIT Vs. Jayshree Tea Industries Ltd. (Supra).
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33.5 Now the question arises to determine the disallowance as per the clause (f) to Explanation-1 of Sec. 115JB of the Act independently. In this regard, we also note that there is no mechanism given under the clause (f) to Explanation-1 of Sec. 115JB of the Act to workout/ determine the disallowance. Therefore in the given facts & circumstances, we feel that ad- hoc disallowance will service the justice to the Revenue and assessee. We, therefore, are directing for the ad-hoc disallowance to avoid the multiplicity of the proceedings and unnecessary litigation. Thus we direct the AO to make the disallowance of 1% of the exempted income as discussed above under clause (f) to Explanation-1 of Sec. 115JB of the Act. We also feel to bring this fact on record that we have restored other cases involving identical issues to the file of AO for making the disallowance as per the clause (f) to Explanation-1 of Sec. 115JB of the Act independently. But now we note that there is no mechanism provided under the clause (f) to Explanation-1 of Sec. 115JB of the Act to make the disallowance independently. Therefore our action for restoring back the issue to the file of AO would unnecessarily cause further litigation. Thus we limit the disallowance on an ad-hoc basis @ 1 % of the exempted income as per the clause (f) to Explanation-1 of Sec. 115JB of the Act. Thus the ground of appeal of the assessee is partly allowed.
In the result appeal of the assessee bearing No. 688/Ahd/2015 for A.Y. 2011-12 is partly allowed for statistical purposes.
Now coming to the Revenue appeal in ITA No.937/Ahd/2015 for A.Y. 2011-12. The Revenue has raised following grounds of appeal:
“1, On the facts and in the circumstances of the case and in law, the Id.. CIT(Appeals) erred in deleting the disallowance of ? 14.51 Lacs on account of lease rent holding. The Id.CIT(A) erred in not appreciating the fact that
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the lease rent was paid in respect of capital assets in accordance with accounting standard 19(AS-19) which distinguishes finance lease from the operating lease and regards the former as a finance transaction and not a lease transaction with conformity with the International Accounting Standard. 2. On the facts and in the circumstances of the case and in law, the CIT(A) erred in deleting the addition of Rs. 9,57,77,910 made on account of disallowance of expenditure for replacement of re-membraning cells - II disregarding the decision of the Hon'ble Supreme CourFlrTtRenifase of CIT vs Saravana Spinning Mills Pvt. Ltd. (2007) 293 ITR 201 (SQ. 3. On the facts and in the circumstances of the case and in law, the Ld.CIT(Appeals) erred in considering the 'tonners' as 'gas cylinders' and accordingly directing the Assessing Officer to allow depreciation @ 60% on chlorine tonners instead of 15% applicable to plant and machinery of Caustic Chlorine Plant. 4. On the facts and in the circumstances of the case and in law, the Ld.CIT(Appeals) erred deleting the disallowance of additional depreciation of Rs. 7,20,949/- on computers installed in the factory premises, without appreciating that the computers are office appliances only whether installed in factory or office and liable for depreciation as applicable to plant and machinery. 5 On the facts and in the circumstances of the case and in law, the Ld. CIT(Appeals) erred in deleting the addition/disallowance of Rs. 2,32,000/- made in 'book profit' on account of prior period expenses completely disregarding with the decision of the Hon’ble High Court of kerala in the case of Shree Bhagwathy Texiles vs. Assistant Commissioner of Income-tax [2011] 199 TAXMAN 14(ker.) 6. The appellant craves leave to add to, amend or alter the above grounds as may be deemed necessary.”
The issue raised by the Revenue is that the Ld. CIT(A) erred in deleting the addition made by the AO for Rs. 14.51 lacs on account of lease rent paid in respect of capital asset.
The assessee in the year under consideration has claimed the expense of Rs. 14.51 lacs on account of lease rent for the property taken on lease from
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Gujarat Industrial Development Corporation for 99 years. The assessee further submitted that it had amortized the lease rent for 99 years. Accordingly, the assessee has claimed lease rent of Rs. 14.51 lacs in the year under consideration.
However, the AO found that in the immediately preceding the assessment year 2010-11 the amount of lease rent was disallowed. Therefore, the AO also disallowed the lease rent for the year under consideration and added to the total income of the assessee.
Aggrieved assessee preferred an appeal to Ld. CIT(A) who has deleted the addition made by observing as under: “3.3 The reason as mentioned by the AO in the assessment order for making disallowance of Rs. 14,51,000/- being amortization of lease rent treating the same as of capital nature as well above submission of the appellant have been considered. In this regard it is mentioned that the Hon'ble High Court of Gujarat in the case of appellant itself for AY 2004-05 in its appeal order in tax appeal no. 776 of 2013 dated 01/08/2014 has held the lease rent is deductable as revenue expenditure and has decided similar issue in favour of appellant and against the Department. Respectfully following this decision of Hon'ble High Court of Gujarat it is held that lease rent of Rs. 14,51,000/- is deductable as revenue expenditure for the year under consideration also. In view of this the AO is directed to allow this lease rent of Rs. 14,51,000/- as revenue expenditure. Thus, the ground of appeal no. 2 of the appellant is allowed.”
Being aggrieved by the order of the Ld. CIT(A) Revenue is in appeal before us.
Both the parties before us relied on the order of the authorities below as favorable to them.
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We have heard the rival contentions and perused the materials available on record. At the outset, we find that the impugned issue is covered in favor of the assessee in its case by the Judgment of Hon’ble Gujarat High Court in Tax appeal no. 579 of 2016 vide order dated 03/10/2016. The relevant extract of the order is reproduced below: "9.0. Now, so far as question no.2 in Tax Appeal Nos. 778 of 2013 and 779 of 2013 and sole question in Tax Appeal No.780 of 2013 i.e. Whether the learned Tribunal was right in law in holding that Rs. 3,86,224/- being amortization of lease rent for the land is capital expenditure is concerned, on considering the decision of this Court in the ease of Sun Pharmaceutical Industries Limited (supra) as well as decision of the Hon'blc Supreme Court in the case of Madras Auto Services Pvt. Limited (supra), we are of the opinion that the learned Tribunal has committed an error in distinguishing the aforesaid decisions and not applying the same to the facts of the case on hand. Considering the aforesaid two decisions, it is to be held that the aforesaid lease rent was deductible as revenue expenditure and the learned Tribunal has erred in holding that Rs. 3,36,224/- after amortization of lease rent paid for the land is capital expenditure. Under the circumstances, considering the aforesaid two decisions of the Hon'ble Supreme Court in the case of Madras Auto Services Pvt. Limited (supra) and the decision of this Hon'ble Court in the ease of Sun Pharmaceutical Industries Limited (supra) the question no. 2 in Tax Appeal Nos. 778 and 779 of 2013 and sole question no. 1 in Tax Appeal No. 780 of 2013 is required to be answered in favour of the assessee and against the revenue.” 3. In the result, appeal is allowed. Question is answered in favour of the assessee. Judgment of the Tribunal to that extent is reversed. Tax Appeal is disposed o’’.
As the facts of the case are identical to the fact as discussed above, therefore respectfully following the same, we do not find any reason to disturb the findings of Ld. CIT (A). Hence the ground of appeal of Revenue is dismissed.
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The next issue raised by the Revenue is that the Ld.CIT (A) erred in deleting the addition made by the AO for Rs. 9,57,77,910/- on account of replacement of re-membrane cells.
The assessee in the year under consideration has claimed an expense of Rs. 9,57,77,910/- on account of the replacement cost of re-membrane cells as Revenue expenditure.
However, the AO found that in the immediately preceding assessment year 2010-11 the same kind of expenses was treated as capital expenditure and depreciation at the rate of 15% was allowed. Therefore, the AO following the order of the earlier assessment year made the disallowance of Rs. 8,85,94,567/- after allowing depreciation of Rs. 71,83,343/- and added to the total income of the assessee.
Aggrieved assessee preferred an appeal to Ld. CIT (A) who has deleted the addition made by the AO by observing as under: ‘’5.3 The reasons as mentioned by the AO in the assessment order for making net disallowance of Rs. 8,85,94,567/- (after allowing depreciation of Rs. 71,83,343/-) being cost of replacement of Membrane Cell as well as above submission of the appellant have been considered. In this regard it is mentioned that following the decision of Hon'ble ITAT, Ahmedabad, for assessment years 2003-04 and 2004-05 in appellant's own case on the similar issues have been decided in its favour in the appeal orders as passed by the CIT(A)-I, Baroda for assessment years 2009-10 and 2010-11. Following such decisions as given in these appeal orders, for the year under consideration also it is held that Membrane Cell expenditure of Rs. 9,57,77,910/- is a revenue expenditure. Another stand which without prejudice to its main ground of appeal no. 4 of the appellant is that the AO has erred in not granting additional depreciation as per the provisions of section 32(2)(iia) of the Act on the amount disallowed by treating the same as of capital nature. In this regard it is mentioned that since the entire expenditure of Rs. 9,57,77,910/- has been allowed as revenue expenditure
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and therefore the above further ground of appeal of the appellant is not required to be adjudicated upon.’’
Being aggrieved by the order of the Ld. CIT(A) Revenue is in appeal before us.
Both Ld. AR, and Ld. DR, before us, relied on the order of the authorities below as favorable to them.
We have heard the rival contentions and perused the materials available on record. At the outset, we find that the impugned issue is covered in favor of the assessee in its case by the Judgment of Hon’ble Gujarat High Court in Tax appeal no. 577 of 2016 vide order dated 01/08/2016. The relevant extract of the order is reproduced below:
“3. Though three different questions are framed, the issue is single viz. the correctness of the decision of the ITAT in deleting addition of Rs. 4.67 crores made on account of expenses incurred for replacement of remembering cells- II. The Revenue would contend that the expenditure is capital in nature and therefore, was not allowable deduction. 4. Both sides agreed that lists issue in case of this very assessee for earlier assessment years came up for consideration before this Court in case of Commissioner of Income Tax vs. Gujarat Alkalies and Chemicals Ltd.reported in 372 ITR 237. Division Bench of this Court dismissed the Revenue's appeal making following observations: "12. The attempt to contend that life of membrane would be spread over from 3 to 5 years or that the amount involved for replacement of membrane is huge and, therefore, the departure on the part of the Revenue could be said as justified, in our view, cannot be countenance for two reasons. One is that the amount involved would not make difference for chargeability of the tax but the nature f expenditure would be relevant for the chargeability of tax. It hardly matters whether the amount is more or less. Further, on the aspect of life of the membrane, nothing is referred to by the A.O. nor by C.I.T. (Appeals) that earlier,
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such aspect, namely, life of the membrane spread over from 3 to 5 years was not considered or it had missed or otherwise.” 5. In the result, this tax appeal is dismissed.”
50.1 As the fact of the case are identical to the fact as discussed above therefore respectfully following the same we do not find any reason to disturb the findings of Ld. CIT (A). Hence the ground of appeal of Revenue is dismissed.
The next issue raised by the Revenue is that Ld. CIT(A) erred in deleting the addition made by the AO on account of depreciation claim of the assessee at the rate of 60% on Chlorine tonners.
The AO during the assessment proceedings found that the assessee has claimed depreciation at the rate of 60% on Caustic Chlorine Plant though it is entitled to depreciation at the rate of 15% only. Accordingly, the AO worked out excessive depreciation claimed by the assessee amounting to Rs. 1,09,93,340/- and added to the total income of the assessee.
Aggrieved assessee preferred an appeal to Ld. CIT(A) who deleted the addition made by the AO by observing as under:
‘’8.3 The reasons as mentioned by the AO in the assessment order for making disallowance of depreciation of Rs. 1,09,93,340/- being difference in rate of depreciation at 15% as per Departmental stand and 60% as per appellant's claim as well as above submission of the appellant have been considered. It is mentioned that the Hon'ble High Court of Gujarat in Tax Appeal No. 942 of 2013 vide order dated 20/01/2014 in appellant's case for AY 2007-08 has dismissed the Departmental appeal holding that the CIT(A) and Tribunal has not committed any error in this respect. In view of this legal position, it is held that for the year under consideration also the appellant is entitled to claim depreciation @ 60% on Chlorine Tonner
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instead of 15%. Thus, the ground of appeal no.7 of the appellant is allowed.’’
Being aggrieved by the order of Ld. CIT(A) the Revenue is in appeal before us.
Both the parties before us relied on the order of authorities below as favorable to them.
We have heard the rival contentions and perused the material available on record. At the outset, we find that the impugned issue is covered in favor of the assessee in its case by the Judgment of Hon’ble Gujarat High Court in Tax appeal no. 942 of 2013 vide order dated 20/01/2014. The relevant extract of the order is reproduced below: “6. Having heard learned counsel for the parties and having perused the materials on record, we see no reason to interfere. Admittedly the toners are being used for storage and transportation of chlorine gas generated in the plant of the assessee. Certificate of the experts also indicated that the same was a gas cylinder. Reference is also made to the Gas Cylinders Rules where the term “Gas Cylinder" has been defined as closed metal container having volume exceeding 500 milliliter but not less than 100litres intended for storage and transportation of compressed gas including Liquefied Petroleum Gas (LPG. 7. We notice that such an issue was considered by two High. Courts of country and held in favour of the assessee. Reference in this regard may be made to the decision of the Delhi High Court in the case of Commissioner of Income Tax vs. Goyal MG Gases Ltd. reported in [2008]296 ITR 72 Delhi), where it was observed that “if we interpret the expression "gas cylinder" to mean "cooking gas cylinder", we will be really adding words to the statute which is not permissible." Relying on the said decision of the Delhi High Court in the case of Commissioner of Income Tax vs. Goyal MG Gases Ltd. (supra) , the Division Bench of Madras High Court in the case of Commissioner of Income Tax vs. Chemplast Sanmar Ltd. reported in [2008] 2S6 ITR 81 (Mad) , held that chlorine toners are gas cylinders. It was held as under : -
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“8. The above view of ours is also supported by the decision of the Delhi High Court in CIT vs Goyal MG Gases Ltd. [2008] 296 ITR, 72, which the Appellate Tribunal has relied upon. In the case before the Delhi High Court, the contention of the assessee therein was that the containers/tankers were nothing but big cylinders as they had all the attributes of a cylinder, which was rejected by the Revenue on the ground that since the so-called cylinders were merely containers and were mounted on trucks, the assesses therein was entitled to depreciation at the rate of 25 per cent as eligible to "plant arid machinery". While deciding the issue whether the item claimed by the assessee therein is gas cylinders or machinery, the Division Bench has found that there is no dispute that the item in question was gas cylinder, though no doubt a big one and that the expression “gas cylinder” used in Appendix I to the Income Tax Rules does not the mention the size of the gas cylinders nor does it say that gas cylinders should be only for cooking purpose or for any other particular purpose and any interpretation of the expression "gas cylinders" to mean “cooking gas cylinder”, would be really adding words to the statute which is not permissible. Accordingly, the Division Bench of the Delhi High Court held that gas cylinders are entitled to depreciation at 100 per cent." B. Learned counsel for the assessee also stated that till the stage of Assessment Year 2004-05 such claim of the assessee for higher depreciation was even accepted by the Revenue. 9.Under the circumstances, we do not find that the CIT(Appeals) and the Tribunal committed any error in this respect. Such question, therefore is not required to be considered.” 56.1 As the fact of the case are identical to the fact as discussed above therefore respectfully following the same we do not find any reason to disturb the findings of Ld.CIT (A). Hence the ground of appeal of Revenue is dismissed.
The next issue raised by the Revenue is that Ld. CIT(A) erred in deleting the addition made by the AO for Rs. 7,20,949/- on account of additional depreciation on the computers installed in the factory premises.
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The assessee during the year under consideration has claimed additional depreciation on the computers purchased during the year and installed in the Caustic Soda Plant and Phosphoric Acid Plant and other plants. However, the AO was of the view that computers are office equipment. Therefore the same cannot be entitled to additional depreciation. Therefore, the AO disallowed the additional depreciation of Rs. 7,20,949/- and added to the total income of the assessee.
Aggrieved assessee preferred an appeal to Ld. CIT(A) who has deleted the additions made by the AO by observing as under:
“9.3 The reasons as mentioned by the AO in the assessment order for disallowing additional depreciation of Rs. 7,20,949/- on computers as well as above submission of the appellant have been considered. In this regard it is mentioned that the similar disallowance of additional depreciation on computers was made by the AO for AY 2007-08 and for AY 2010-11. However, the Ld. CIT(A)-I, Baroda has decided the issue regarding claim of additional depreciation in their appeal orders as passed for these two assessment years in favour of appellant. Further, the Hon'ble High Court of Gujarat in Tax Appeal No. 942 of 2013 vide order dated 20/01/2014 for AY 2007-08 has dismissed the Departmental appeal holding that the CIT(Appeals) and Tribunal treating the same as simplicitor computers and granting depreciation at the rate prescribed under the Law calls no interference. In view of this it is held that the appellant is entitled for additional depreciation on the computers for the year under consideration also. Thus, the ground of appeal no. 8 of the appellant is allowed.”
Being aggrieved by the order of Ld. CIT(A) the Revenue is in appeal before us.
Both the parties before us relied on the order of the order of the authorities below as favorable to them.
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We have heard the rival contentions and perused the materials available on record. At the outset, we find that the impugned issue is covered in favor of the assessee in its case by the Judgment of Hon’ble Gujarat High Court in Tax appeal no. 942 of 2013 vide order dated 20/01/2014. The relevant extract of the order is reproduced below:
“10. Coming to the second question, facts are that during the previous year relevant to the Assessment Year 2007-08 the assessee installed certain computers in its factory premises and claimed depreciation available to computeRs. The Assessing Officer, however, held that the computers shouldbe treated either as office appliances failing which they would form part of the plant and machinery. In either case, right of depreciation would be 208 and not 608 as claimed by the assessee. The assessee carriedthe matter in appeal. CIT (Appeals) reversed the decision of the Assessing Officer. In further appeal by the Revenue before the Tribunal, decision of the CIT(Appeals) was confirmed in following terms :- “50. We have heard both the parties in our opinion, the Ld CIT(A) has correctly analyzed the facts and decided the issue in the light of applicable law. It cannot be said as a universal proposition of law that computers are always used only in offices and not for manufacturing activities. The finding of fact recorded by the Ld CIT(A) has not been rebutted before us. We are in agreement with the view taken by the Ld. CIT(A) in this regard. His order in this behalf therefore confirmed. GroundNo. 2 taken by the Department is dismissed.” 11. We cannot find any fault with the observations of the Tribunal while confirming the view of CIT(Appeals) that there cannot be universal preposition of law that computers are used only in offices and not for manufacturing activities. The insistence of the Assessing Officer that the same should therefore be treated as office appliance cannot be countenanced. Perhaps if it was shown that the computers formed part of the integrated manufacturing process, his stand that the same would form part of the plant and machinery may have some basis. In the present case, no such material was available on record. It is not as if that in factory premise, computers cannot be installed for direct use in manufacturing activity; thereby forming part of machinery used in such activity. There may be number of ways in which installation of a computer may enhance and improve the efficiency. There is nothing on record to suggest that the computers were part of the plant and machinery.
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We are not oblivion to the decision of this Court in the case of Commissioner of Income Tax vs. Statronics and Enterprises Pvt. Ltd. reported in [2007] 288 ITR 455 (Guj), where computers were treated as part of plant and machinery, and therefore, held entitled to additional depreciation under Section 32A of the Act. It was, however, a case where the computers were installed in the office premises. The Revenue’s contention, therefore, was that being part of office appliances would not qualify for such additional depreciation. The Court found that the computers were used for data processing and, therefore, for manufacturingprocess. It was in this background the above finding was given. 13. In that view of the matter, CIT(Appeals) and the Tribunal treating the same as simplicitor computers and granting depreciation at the rate prescribed under the law calls for no interference. In the result, Tax Appealis dismissed.”
62.1 As the fact of the case are identical to the fact as discussed above therefore respectfully following the same we do not find any reason to disturb the findings of Ld. CIT (A). Hence the ground of appeal of Revenue is dismissed.
The last issue raised by the Revenue is that Ld. CIT(A) erred in deleting the addition of prior period expenses while determining book profit u/s 115JB of the Act.
63.1 We have already adjudicated this issue vide paragraph no 10 of this order along with the ground of appeal raised by the assessee in ITA No.688/Ahd/2015 for A.Y. 2011-12. Thus the ground of appeal of Revenue is dismissed.
63.2 In the result appeal of the Revenue is dismissed.
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In the combined result appeal of the assessee bearing no.688/Ahd/2015 for A.Y. 2011-12 is partly allowed for statistical purposes and the appeal of the Revenue bearing no. 937/Ahd/2015 for A.Y. 2011-12 is dismissed.
Order pronounced in the Court on 25/02/2019 at Ahmedabad.
-Sd- -Sd- (MS MADHUMITA ROY) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER (True Copy) Ahmedabad; Dated 25/02/2019 manish आदेश क� ��त�ल�प �े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent. 3. संबं�धत आयकर आयु�त / Concerned CIT 4. आयकर आयु�त(अपील) / The CIT(A) 5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण / DR, ITAT, 6. गाड� फाईल / Guard file. आदेशानुसार/BY ORDER, उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपील�य अ�धकरण, अहमदाबाद / ITAT, Ahmedabad