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Before: Shri Duvvuru RL Reddy & Shri G. Manjunatha
O R D E R
PER DUVVURU RL REDDY, JUDICIAL MEMBER:
This appeal filed by the assessee is directed against the order of the ld. Commissioner of Income Tax (Appeals), Chennai, dated 30.04.2019 relevant to the assessment year 2010-11.
In the second round of litigation, the order of the Tribunal in 05.11.2019 has been recalled vide order in M.P. No. 300/Chny/2019 dated 20.01.2020 to adjudicate the specific ground No. 3 raised in its appeal. Ground No. 3 raised in the appeal of the assessee reads as under:
“3) It is obvious that if the expenditure of 92,41,200/- is to be capitalised then the sum of 16,24,157/- already credited as income should first be reduced from the total income returned and then this sum should be deducted from the cost of 92,41,200/-. If this sum of 16,24,157/- is not deducted from the total income it will amount to double taxation i.e., the insurance claim received once as income and against as it is deducted from the cost to calculate the depreciation allowable. Double taxation is unlawful. The authorities under the Act are under an obligation to act in accordance with law. If an assessee, under a mistake, misconception or not being properly instructed is over assessed, the authorities under the Act are required to assist him and ensure that only legitimate taxes due are collected (367 ITR page 498 (SC). Against the above ground raised by the assessee during appellate proceedings, the ld. CIT(A) has observed as under: “Admittedly, the assessee company has debited the cost of wind turbine at ₹.92,41,200/- and credited the insurance claim of ₹.16,24,157/- in the repairs and maintenance account. Effectively, therefore, a sum of ₹.76,17,043/- has been debited to the repairs and maintenance account. The assessing officer has treated this net amount, which has been claimed as revenue expenditure as capital expenditure. Under the admitted facts, the claim of the authorised representative that the sum of ₹.16,24,157/- of insurance claim should be reduced from the income is factually incorrect and hence cannot be entertained.”
Before us, the ld. Counsel for the assesse has submitted that against the cost of wind turbine at ₹.92,41,200/-, the Assessing Officer has reduced the insurance claim received by the assessee on the old unit of ₹.16,24,157/- and depreciation on the balance amount of ₹.76,17,043/- was allowed. It was further submission that inadvertently, the assessee has declared the insurance receipt as income in the total returned income of the assessee and prayed for exclusion of the same. On the other hand, the ld. DR supported the orders of authorities below.
We have heard both the sides, perused the materials available on record and gone through the orders of authorities below. The expenditure of ₹.92,41,200/- incurred on account of replacement of wind mill was debited to plant maintenance account and the Tribunal has concluded that the above expenditure is capital in nature and not revenue. Now the claim of the assessee is that the receipt of insurance claim against old wind mill of ₹.16,24,157/- was inadvertently treated as income in the books of accounts. Therefore, it was the submission that when the expenditure of ₹.92,41,200/- was capitalised then the sum of ₹.16,24,157/- being insurance claim received and already credited as income should first be reduced from the total income returned and then the receipt of insurance claim should be deducted from the cost of ₹.92,.41,200/-. It was further submission that if this sum of ₹.16,24,157/- is not deducted from the total income, it will amount to double taxation i.e., the insurance claim received once as income and again as it is deducted from the cost to calculate the depreciation allowable. We find force in the argument of the ld. Counsel. Accordingly, we remit the matter back to the file of the Assessing Officer to allow deduction of insurance claim from the total returned income, after verification of the same in the return of income as well as its admissibility by affording an opportunity of being heard to the assessee. Thus, the ground raised by the assessee is allowed for statistical purposes.
In the result, the appeal filed by the assessee is partly allowed for statistical purposes. Order pronounced on the 27th October, 2021 in Chennai.