Khemani Distilleries Pvt.Ltd.,, Nani Daman v. The ACIT., Vapi Circle,, Vapi

ITA 2149/AHD/2007 | 2005-2006
Pronouncement Date: 12-04-2010 | Result: Dismissed

Appeal Details

RSA Number 214920514 RSA 2007
Bench Ahmedabad
Appeal Number ITA 2149/AHD/2007
Duration Of Justice 2 year(s) 10 month(s) 22 day(s)
Appellant Khemani Distilleries Pvt.Ltd.,, Nani Daman
Respondent The ACIT., Vapi Circle,, Vapi
Appeal Type Income Tax Appeal
Pronouncement Date 12-04-2010
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted D
Tribunal Order Date 12-04-2010
Date Of Final Hearing 12-04-2010
Next Hearing Date 12-04-2010
Assessment Year 2005-2006
Appeal Filed On 21-05-2007
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'D' [BEFORE SHRI MAHAVIR SINGH JM AND SHRI A N PAHUJA A M] ITA NO.2149/AHD/2007 (ASSESSMENT YEAR:-2005-06) M/S KHEMANI DISTILLERIES PVT. LTD. KACHIGAM ROAD RINGANWADA NANI DAMAN [PAN:AAACK9738N] V/S ASSISTANT COMMISSIONER OF INCOME-TAX VAPI CIRCLE VAPI [APPELLANT] [RESPONDENT] ASSESSEE BY :- SHRI BANDISH SOPARKAR AR REVENUE BY:- SHRI C K MISHRA DR O R D E R A N PAHUJA: THIS APPEAL BY THE ASSESSEE AGAINST AN ORDER DATED 28- 02-2007 OF THE LD.CIT(APPEALS) VALSAD RAISES THE F OLLOWING GROUNDS- 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) VALSAD [HEREINAFTER REFERRED TO AS 'C.I.T.(A)'] HAS ERRED IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW IN UPHOLDING T HE DEPRECIATION DETERMINED BY THE ASSESSING OFFICER ( HEREINAFTER R EFERRED TO AS ' A.O.) AT RS.1 36 23 238/- AS AGAINST DEPRECIATION OF RS.1 46 57 811/- 2. THE LD. C.I.T. (A) HAS FAILED TO FOLLY APPRECIAT E THE FACT THAT THE APPELLANT COMPANY HAD NOT CLAIMED DEPRECIATION FOR THE ASSESSMENT YEARS 1996-97 TO 2000-2001 AND HAD CLAIMED DEPRECIA TION IN ACCORDANCE WITH THE PROVISIONS OF LAW FOR THE FIRST TIME FOR T HE ASSESSMENT YEAR 2001- 2002 AND SUBSEQUENTLY FOR THE ASSESSMENT YEAR 2002- 2003 2003-04 2004-05 AND 2005-06. 3. THE LD. C.I.T. (A) HAS ERRED IN LAW AND IN THE F ACTS AND CIRCUMSTANCES OF THE CASE IN UPHOLDING THE ACTION O F THE A-Q APPLYING RATIO OF THE BOMBAY HIGH COURT JUDGMENT IN THE CASE OF INDIAN RAYON CORPORATION LIMITED VS. C.I.T. 261 ITR 98 DESPITE T HE FACT THAT THE RATIO OF THE SAID JUDGMENT IS LIMITED TO PECULIAR FACTS OF T HAT CASE AND IS NOT APPLICABLE ON THE FACTS OF THE APPELLANT. 4. THE LD. C.I.T. (A) OUGHT TO HAVE APPRECIATED AND FOLLOWED THE ORDERS OF THE BOMBAY TRIBUNAL IN THE CASE OF PLASTI BLENDS INDIA LTD. I.T.A. NO. 4542/MUM/99 ASSESSMENT YEAR 1996-97 AND KABRA E XTRUSION TECHNIK LTD. I.T.A. NO. 1517/MUM/99 ASSESSMENT YEAR 1995-96 -WHEREIN BOMBAY TRIBUNAL HAD CONSIDERED THE SCOPE AND APPLICABILITY OF THE AFORESAID ITA NO.2149/AHD/2007 2 2 BOMBAY HIGH COURT JUDGEMENT IN THE CASE OF INDIAN R AYON CORPORATION LIMITED VS. C.I.T 261 ITR 98. 5. THE LD. C.I.T. (A) HAS ERRED IN THE FACTS AND CI RCUMSTANCES OF THE CASE WHILST UPHOLDING THE ORDER OF THE A.0. WITH R EGARD TO THE CLAIM OF DEPRECIATION IN NOT APPRECIATION THAT THE APPELLAN T HAD CLAIMED DEPRECIATION FIRST TIME IN A.Y. 2001-2002 AND THAT APPELLANT HAD NOT CLAIMED DEPRECIATION IN THE ASSESSMENT YEARS 1996-9 7 TO 2000-2001 [BASED ON THE JUDGEMENT OF THE SUPREME COURT IN THE CASE OF C.I.T. VS. MAHENDRA MILLS 243. ITR. 56(S.C.)] AND NO DEPRECIAT ION HAS BEEN ALLOWED U/S. 32 OF THE ACT IN THE ASSESSMENT OF THOSE YEAR S. 6. THE LD. C.I.T. (A) OUGHT TO HAVE HELD THAT A.O. WAS WRONG IN MAKING THE FOLLOWING STATEMENT IN THE ORDER OF ASSESSMENT: 'THE APPLICATION OF THE AFORESAID DECISION OF THE H ON'BLE BOMBAY HIGH COURT WOULD BE RELEVANT FOR THE PURPOSE OF CORRECT TREATMENT OF ALLOWANCE OF DEPRECIATION IN CASES U/S.80IA/80IB COVERED UNDE R CHAPTER - VIA OF THE IT. ACT 1961. THIS WOULD BE APPLICABLE FOR ASSESSM ENTS PRIOR TO ASSESSMENT YEAR 2002-2003. (UNDERLING OURS).' 7. THE LD. CILT. (A) HAS ERRED IN LAW IN UPHOLDING THE COMPUTATION OF DEDUCTION OF DEPRECIATION MADE BY THE AO. BY STATIN G THAT RATIO OF THE BOMBAY HIGH COURT JUDGMENT IN THE CASE OF INDIAN RA YON CORPORATION LIMITED VS. C.LT. 261 ITR 98 WAS APPLICABLE EVEN TO PRIOR YEAR; AND IN COMPUTING DEPRECIATION FOR THE YEARS 1996-97 TO 200 1-2002 DESPITE THE FACT THAT THE APPELLANT HAD NOT CLAIMED THE SAME AN D NO DEPRECIATION HAD BEEN ALLOWED U/S. 32 OF THE ACT TO THE APPELLANT I N THOSE YEARS ON ASSESSMENT. 8. THE LD. C.LT. (A) OUGHT TO HAVE APPRECIATED THAT THE SUPREME COURT IN THE CASE OF C.I.T. VS. MAHENDRA MILLS (S.C ) 243 ITR 56 HAS HELD THAT: 'ALLOWANCE OF DEPRECIATION IS CALCULATED ON THE WRI TTEN DOWN VALUE OF THE ASSETS WHICH WRITTEN DOWN VALUE WOULD BE TH E ACTUAL COST OF ACQUISITION LESS THE AGGREGATE OF ALL THE DEPRECIAT ION 'ACTUALLY ALLOWED' TO THE ASSESSEE FOR THE PAST YEARS 'ACTUAL LY ALLOWED' DOES NOT MEAN 'NATIONALLY ALLOWED'. 9. THE LD. C.I.T. (A) OUGHT TO HAVE APPRECIATED THA T THE AMENDMENT TO THE INCOME TAX ACT BY INSERTION & EXPLANATION 5 TO SECTION 32 TO OVERCOME RATIO OF THE SUPREME COURT JUDGMENT IN THE CASE OF CIT. VS. MAHENDRA MILLS (S.C.) 243 ITR 56; CAME IN TO EFFECT ONLY FROM 01.04.2002. ITA NO.2149/AHD/2007 3 3 10. THE LD. C.I.T. (A) OUGHT TO HAVE ALLOWED THE AP PELLANT'S CLAIM FOR DEPRECIATION AS COMPUTED BY THE APPELLANT IN ITS RE TURN OF INCOME ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW. THE APPELLANT CRAVES LEAVE TO ADD TO ALTER OR AM END ANY OF THE GROUNDS OF APPEAL AT OR BEFORE THE TIME OF HEARING OF THE A PPEAL. 2 FACTS IN BRIEF AS PER RELEVANT ORDERS ARE THAT THE RETURN DECLARING AN INCOME OF RS.6 61 75 593/- FILED ON 28 -10-2005 BY THE ASSESSEE AFTER BEING PROCESSED ON 28-02-2006 U/S 1 43(1) OF THE INCOME-TAX ACT 1961 [HEREINAFTER REFERRED TO AS TH E ACT] WAS TAKEN UP FOR SCRUTINY WITH THE ISSUE OF NOTICE U/S 143(2) OF THE ACT ON 02- 05-2006. DURING THE COURSE OF ASSESSMENT PROCEEDING S THE AO NOTICED THAT THE ASSESSEE CLAIMED DEDUCTION U/S 80I B OF THE ACT AT THE RATE OF 30% OF THE ELIGIBLE PROFITS. SINCE THE MANUFACTURING ACTIVITY IN THE INDUSTRIAL UNDERTAKING WAS STARTED BY THE ASSESSEE IN THE PERIOD RELEVANT TO AY 1996-97 THIS WAS 10 TH YEAR OF CLAIM OF THE SAID DEDUCTION. THE AO NOTICED DURING THE COURSE OF ASSESSMENT PROCEEDINGS THAT THE ASSESSEE DID NOT CLAIM DEPRECI ATION UNTIL THE AY 2000-01. HOWEVER IN THE AYS 2001-02 TO 2004-05 DEPRECIATION WAS ALLOWED TO THE ASSESSEE TAKING INTO CONSIDERATI ON THE OPENING WDV OF ASSETS RIGHT FROM THE BEGINNING I.E. AY 1996 -97. ON THAT BASIS DEPRECIATION IN THE YEAR UNDER CONSIDERATION WORKED OUT TO RS.1 36 23 238/- AS AGAINST RS.1 46 57 811/- CLAIME D BY THE ASSESSEE. ACCORDINGLY RELYING UPON THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF CAMBAY ELECTRIC SUPPLY CO. VS. CIT (1978) 113 ITR 84 (SC) AND THE DECISION OF THE HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF INDIAN RAY ON CORPORATION LTD. VS. CIT (2003) 261 ITR 98 (BOM) AND DISTINGUIS HING THE DECISIONS RELIED UPON ON BEHALF OF THE ASSESSEE IN THE CASE OF PLASTIBLENDS INDIA LTD. IN ITA NO.4541/MUM/99 AND K ABRA EXTRUSION TECHNIK LTD. IN ITA NO.1517/MUM/99 THE AO DISALLOW ED THE EXCESS DEPRECIATION TO THE EXTENT OF RS.10 34 873/- WHILE DETERMINING THE DEDUCTION U/S 80IB OF THE ACT. ITA NO.2149/AHD/2007 4 4 3 ON APPEAL THE LEARNED CIT(A) FOLLOWING THE DECI SION DATED 09-11-2005 OF THE SPECIAL BENCH OF ITAT IN T HE CASE OF VAHID PAPER CONVERTERS & OTHERS IN ITA NO.1686/AHD/2004 UPHELD THE FINDINGS OF THE AO IN THE FOLLOWING TERMS:- AFTER GOING THROUGH THE DETAILED FINDINGS OF THE H ON'BLE ITAT AHMEDABAD IN CASE OF VAHID PAPER CONVERTERS AND OTHERS AND AL SO AFTER PURSUING THE RATIO LAID DOWN BY THE BOMBAY HIGH COURT AS WELL AS HON'BLE MUMBAI TRIBUNAL I AM OF THE VIEW THAT FINDINGS OF THE SPE CIAL BENCH IN CASE OF VAHID PAPER CONVERTERS AND OTHERS (SUPRA) ARE RATIO NALISED AND FULLY APPLICABLE TO THE FACTS OF THE CASE OF THE APPELLAN T AND RESPECTFULLY FOLLOWING THAT I AM OF THE VIEW THAT THE ASSESSING OFFICER HAS CORRECTLY COMPUTED THE DEPRECIATION AND TOTAL INCOME OF THE A PPELLANT FOR GRANTING DEDUCTION U/S 80IB OF THE ACT. THE FINDINGS OF THE ASSESSING OFFICER AND QUANTUM OF DEDUCTION ALLOWED BY AO U/S. 80IB ARE HE REBY CONFIRMED . 4 THE ASSESSEE IS NOW IN APPEAL BEFORE US. THE LEA RNED AR AT THE OUTSET WHILE RELYING UPON THE DECISION DATED 28.11.2008 IN THE ASSESSEES OWN CASE FOR AY 2002-03 AND THE D ECISION DATED 26-03-2010 IN THE CASE OF M/S SIDDHARTH CORPORATION IN ITA NO.866/AHD/2007 AND IN THE CASE OF M/S GAUTAM ENTER PRISES IN ITA NO.867/AHD/2007 CONTENDED THAT SINCE THE ASSESSEE DID NOT CLAIM ANY DEPRECIATION FOR THE ASSESSMENT YEARS UNTIL 200 0-01 THE AO WAS NOT JUSTIFIED IN THRUSTING THE DEPRECIATION OF THE EARLIER YEARS WHICH HAD NOT BEEN ACTUALLY ALLOWED ON THE ASSESSE E. THE LEARNED DR ON THE OTHER HAND SUPPORTED THE FINDINGS OF TH E CIT(A). 5 WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH T HE FACTS OF THE CASE. WE FIND THAT THE TRIBUNAL IN ASSESSEES O WN CASE VIDE ORDER DATED 28-11-2008 IN ITA NO.1885/AHD/2005 ON A SIMILAR ISSUE CONCLUDED AS UNDER:- 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON REC ORD. IN THE INSTANT CASE IT IS NOT IN DISPUTE THAT THE ASSESSEE NEITHER HAS CLAIMED NOR WAS ALLOWED DEPRECIATION IN RESPECT OF FIXED ASSETS USED IN ITS INDUSTRIAL UNIT. DURING THE YEAR UNDER CONSIDERATION FOR ALLOWING DEPRECIATION THE ASSESSING OFFICER DEDUCTED THE VALUE OF THE DEPRECIATION WHICH OUGHT TO HAVE BEEN CLAIMED ITA NO.2149/AHD/2007 5 5 BY THE ASSESSEE IN EARLIER YEARS AND WHICH OUGHT TO HAVE BEEN ALLOWED TO THE ASSESSEE BY THE DEPARTMENT IN THE EARLIER YEARS . THUS THE DISPUTE BEFORE US RAISED ON DETERMINING OF THE WRITTEN DOWN VALUE OF THE YEAR UNDER CONSIDERATION WITH REFERENCE TO WHICH DEPRECI ATION U/S 32 OF THE ACT IS TO BE CALCULATED. WE FIND THAT THE WRITTEN DOWN VALUE HAS BEEN DEFINED IN SECTION 43(6) OF THE ACT WHICH READS AS UNDER:- 6) 'WRITTEN DOWN VALUE'MEANS (A) IN THE CASE OF ASSETS ACQUIRED IN THE PREVIOUS YEAR THE ACTUAL COST TO THE ASSESSEE; (B) IN THE CASE OF ASSETS ACQUIRED BEFORE THE PREVI OUS YEAR THE ACTUAL COST TO THE ASSESSES LESS ALL DEPRECIATION A CTUALLY ALLOWED TO HIM UNDER THIS ACT OR UNDER THE INDIAN INCOME-TAX ACT 1922 (11 OF 1922) OR ANY ACT REPEALED BY THAT ACT OR UNDER AN Y EXECUTIVE ORDERS ISSUED WHEN THE INDIAN INCOME-TAX ACT 1886 (2 OF 1886) WAS IN FORCE: [PROVIDED THAT IN DETERMINING THE WRITTEN DOWN VALU E IN RESPECT OF BUILDINGS MACHINERY OR PLANT FOR THE PURPOSES OF C LAUSE (II) OF SUB- SECTION (1) OF SECTION 32 'DEPRECIATION ACTUALLY A LLOWED' SHALL NOT INCLUDE DEPRECIATION ALLOWED UNDER SUB-CLAUSES (A) (B) AND (C) OF CLAUSE (VI) OF SUB-SECTION (2) OF SECTION 10 OF THE INDIAN INCOME-TAX ACT 1922 (11 OF 1922) WHERE SUCH DEPRECIATION WAS NOT DEDUCTIBLE IN DETERMINING THE WRITTEN DOWN VALUE FOR THE PURPO SES OF THE SAID CLAUSE (VI);] [(C) IN THE CASE OF ANY BLOCK OF ASSETS (I) IN RESPECT OF ANY PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR COMMENCING ON THE 1ST DAY OF APRIL 1988 THE AGGRE GATE OF THE WRITTEN DOWN VALUES OF ALL THE ASSETS FALLING WITHI N THAT BLOCK OF ASSETS AT THE BEGINNING OF THE PREVIOUS YEAR AND AD JUSTED (A) BY THE INCREASE BY THE ACTUAL COST OF ANY ASSET FALLING WITHIN THAT BLOCK ACQUIRED DURING THE PREVIOUS YEA R; (B) BY THE REDUCTION OF THE MONEYS PAYABLE IN RESPE CT OF ANY ASSET FALLING WITHIN THAT BLOCK WHICH IS SOLD OR DISCARDED OR DEMOLISHED OR DESTROYED DURING THAT PREVIOUS YEA R TOGETHER WITH THE AMOUNT OF THE SCRAP VALUE IF ANY SO HOWEVER THAT THE AMOUNT OF SUCH REDUCTION DOES NOT EXCEED THE WRITTEN DOWN VALUE AS SO INCREASED; AND (C) IN THE CASE OF A SLUMP SALE DECREASE BY THE AC TUAL COST OF THE ASSET FALLING WITHIN THAT BLOCK AS REDU CED - (A) BY THE AMOUNT OF DEPRECIATION ACTUALLY ALLOWED TO HIM UNDER THIS ACT OR UNDER THE CORRESPONDING ITA NO.2149/AHD/2007 6 6 PROVISIONS OF THE INDIAN INCOME-TAX ACT 1922 (11 O F 1922) IN RESPECT OF ANY PREVIOUS YEAR RELEVANT TO T HE ASSESSMENT YEAR COMMENCING BEFORE THE 1ST DAY OF APRIL 1988; AND (B) BY THE AMOUNT OF DEPRECIATION THAT WOULD HAVE BEEN ALLOWABLE TO THE ASSESSEE FOR ANY ASSESSMENT YEAR COMMENCING ON OR AFTER THE 1ST DAY OF APRIL 1 588 AS IF THE ASSET WAS THE ONLY ASSET IN THE RELEVANT BLOCK OF ASSETS SO HOWEVER THAT THE AMOUNT OF SUCH DECREASE DOES NOT EXCEED THE WRITTEN DOWN VALUE;] (II) IN RESPECT OF ANY PREVIOUS YEAR RELEVANT TO TH E ASSESSMENT YEAR COMMENCING ON OR AFTER THE 1ST DAY OF APRIL 1 989 THE WRITTEN DOWN VALUE OF THAT BLOCK OF ASSETS M THE IMMEDIATEL Y PRECEDING PREVIOUS YEAR AS REDUCED BY THE DEPRECIATION ACTUAL LY ALLOWED IN RESPECT OF THAT BLOCK OF ASSETS IN RELATION TO THE SAID PRECEDING PREVIOUS YEAR AND AS FURTHER ADJUSTED BY THE INCREA SE OR THE REDUCTION REFERRED TO IN ITEM EXPLANATION L.WHEN IN A CASE OF SUCCESSION IN BUSI NESS OR PROFESSION AN ASSESSMENT IS MADE ON THE SUCCESSOR UNDER SUBSEC TION (2) OF SECTION 170 THE WRITTEN DOWN VALUE OF ANY ASSET OR ANY BLOC K OF ASSETS] SHALL BE THE AMOUNT WHICH WOULD HAVE BEEN TAKEN AS ITS WRITT EN DOWN VALUE IF THE ASSESSMENT HAD BEEN MADE DIRECTLY ON THE PERSON SUC CEEDED TO. EXPLANATION 2. WHERE IN ANY PREVIOUS YEAR ANY BLO CK OF ASSETS IS TRANSFERRED (A) BY A HOLDING COMPANY TO ITS SUBSIDIARY COMPANY OR BY A SUBSIDIARY COMPANY TO ITS HOLDING COMPANY AND THE CONDITIONS OF CLAUSE (IV) OR AS THE CASE MAY BE OF CLAUSE (V) O F SECTION 47 ARE SATISFIED; OR (B) BY THE AMALGAMATING COMPANY TO THE AMALGAMATED COMPANY IN A SCHEME OF AMALGAMATION AND THE AMALGAMATED CO MPANY IS AN INDIAN COMPANY THEN NOTWITHSTANDING ANYTHING CONT AINED IN CLAUSE (1) THE ACTUAL COST OF THE BLOCK OF ASSETS IN THE CASE OF THE TRANSFEREE-COMPANY OR THE AMALGAMATED COMPANY- AS THE CASE MAY BE -SHALL BE THE WRITTEN DOWN VALUE OF THE BLOC K OF ASSETS AS IN THE CASE OF THE TRANSFEROR-COMPANY OR THE AMALGAMAT ING COMPANY FOR THE IMMEDIATELY PRECEDING PREVIOUS YEAR AS REDU CED BY THE AMOUNT OF DEPRECIATION ACTUALLY ALLOWED IN RELATION TO THE SAID PRECEDING PREVIOUS YEAR.] [EXPLANATION 2A. WHERE IN ANY PREVIOUS YEAR ANY A SSET FORMING PART OF A BLOCK OF ASSETS IS TRANSFERRED BY A DEMERGED COMPAN Y TO THE RESULTING ITA NO.2149/AHD/2007 7 7 COMPANY THEN NOTWITHSTANDING ANYTHING CONTAINED I N CLAUSE (1) THE WRITTEN DOWN VALUE OF THE BLOCK OF ASSETS OF THE DE MERGED COMPANY FOR THE IMMEDIATELY PRECEDING PREVIOUS YEAR SHALL BE REDUCE D BY THE [WRITTEN DOWN VALUE OF THE ASSETS] TRANSFERRED TO THE RESULTING C OMPANY PURSUANT TO THE DEMERGER. EXPLANATION 2B. WHERE IN A PREVIOUS YEAR ANY ASS ET FORMING PART OF A BLOCK OF ASSETS IS TRANSFERRED BY A DEMERGED COMPAN Y TO THE RESULTING COMPANY THEN NOTWITHSTANDING ANYTHING CONTAINED I N CLAUSE (1) THE WRITTEN DOWN VALUE OF THE BLOCK OF ASSETS IN THE CA SE OF THE RESULTING COMPANY SHALL BE THE [WRITTEN DOWN VALUE OF THE TRA NSFERRED ASSETS [***] OF THE DEMERGED COMPANY IMMEDIATELY BEFORE THE DEMERGE R. EXPLANATION 3.ANY ALLOWANCE IN RESPECT OF ANY DEPR ECIATION CARRIED FORWARD UNDER SUB-SECTION (2) OF SECTION 32 SHALL B E DEEMED TO BE DEPRECIATION 'ACTUALLY A/LOWED'. [EXPLANATION 4.FOR THE PURPOSES OF THIS CLAUSE TH E EXPRESSIONS 'MONEYS PAYABLE' AND 'SOLD' SHALL HAVE THE SAME MEANINGS AS IN THE EXPLANATION BELOW SUB-SECT/ON (4) OF SECTION 41. EXPLANATION 5. WHERE IN A PREVIOUS YEAR ANY ASSE T FORMING PART OF A BLOCK OF ASSETS IS TRANSFERRED BY A RECOGNISED STOC K EXCHANGE IN INDIA TO A COMPANY UNDER A SCHEME FOR CORPORATISATION APPROVED BY THE SECURITIES AND EXCHANGE BOARD OF INDIA ESTABLISHED UNDER SECTI ON 3 OF THE SECURITIES AND EXCHANGE BOARD OF INDIA ACT 1992 (15 OF 1992) THE WRITTEN DOWN VALUE OF THE BLOCK OF ASSETS IN THE CASE OF SUCH CO MPANY SHALL BE THE WRITTEN DOWN VALUE OF THE TRANSFERRED ASSETS IMMEDI ATELY BEFORE SUCH TRANSFER.]' 10. A PERUSAL OF THE ABOVE PROVISIONS SHOWS THAT TH E WDV IN RESPECT OF DEPRECIATION IS TO BE CALCULATED IS THE ACTUAL COST OF THE ASSET TO THE ASSESSEE AS REDUCED BY THE AMOUNT OF THE DEPRECIATI ON ACTUALLY ALLOWED TO THE ASSESSEE. NOW IN THE INSTANT CASE IT IS NOT IN DISPUTE THAT IN THE EARLIER YEARS NO DEPRECIATION WAS ALLOWED TO THE ASSESSEE I N RESPECT OF THE FIXED ASSETS IN QUESTION. THE REVENUE COULD NOT BRING ON RECORD ANY MATERIAL BEFORE US TO SHOW THAT THOUGH THE DEPRECIATION WAS NOT CLAIMED BY THE ASSESSEE BUT IN FACT SUCH DEPRECIATION WAS ALLOWED BY THE DEPARTMENT AS DEDUCTION TO THE ASSESSEE IN THE ASSESSMENT MADE IN RESPECT OF THE INCOME OF THE ASSESSEE. IN OUR CONSIDERED OPINION IT IS NOT OPEN TO THE REVENUE TO DEDUCT ANY AMOUNT FROM THE COST OF THE A SSET TO DETERMINE THE WDV ON THE GROUND THAT SUCH AMOUNT SHOULD HAVE BEEN CLAIMED BY THE ASSESSEE AS DEPRECIATION IN EARLIER YEAR. IN OUR CO NSIDERED VIEW WDV CAN BE ASCERTAINED ONLY BY REDUCING THE ACTUAL DEPRECIA TION ALLOWED TO THE ASSESSEE IN AN ASSESSMENT AND NOT THE AMOUNT WHICH OUGHT TO HAVE BEEN ALLOWED TO THE ASSESSEE. IT IS THE ACTUAL DEPRECIAT ION ALLOWED TO THE ASSESSEE WHICH ONLY CAN BE REDUCED FOR ASCERTAINING THE WDV AND NOT THE AMOUNT WHICH IS NOTIONALLY ALLOWED TO THE ASSESSEE. THUS IN THE ABSENCE ITA NO.2149/AHD/2007 8 8 OF ANY MATERIAL DROUGHT BEFORE US TO SHOW THAT ANY REMEDIAL MEASURE WAS TAKEN BY THE REVENUE IN THE EARLIER ASSESSMENT YEAR S TO ACTUALLY ALLOW THE DEPRECIATION TO THE ASSESSEE IN THE YEAR IN WHICH T HE ASSESSEE HAS HIMSELF NOT CLAIMED SUCH DEPRECIATION IN OUR CONSIDERED VI EW THE NOTIONAL AMOUNT CANNOT BE REDUCED TO ASCERTAIN THE WDV AS PER THE P ROVISIONS OF SECTION 43(6) OF THE ACT. WE THEREFORE SET ASIDE THE ORDE RS OF THE LOWER AUTHORITIES AND ALLOW THE DEPRECIATION OF PS.3 25 69 030/- AS C LAIMED BY THE ASSESSEE AS AGAINST THE DEPRECIATION OF RS.2 53 98 048/- ALL OWED TO THE ASSESSEE. THUS THIS GROUND OF APPEAL IS ALLOWED. 5.1 THE AFORESAID DECISION HAS SUBSEQUENTLY BEEN F OLLOWED BY ANOTHER BENCH IN THE CASE OF M/S SIDDHARTH CORPORA TION IN ITA NO.866/AHD/2007 AND IN THE CASE OF M/S GAUTAM ENTER PRISES IN ITA NO.867/AHD/2007. 6 IN THE LIGHT OF THE VIEW TAKEN IN THE AFORESAID D ECISIONS INCLUDING IN THE ASSESSEES OWN CASE FOR THE PRECED ING ASSESSMENT YEAR WE HAVE NO OPTION BUT TO ALLOW GROUND NOS.1 2 AND 10 OF THE APPEAL. SINCE THE CLAIM OF THE ASSESSEE HAS BEEN AL LOWED IN THEIR FAVOUR OTHER GROUND NOS.3 TO 9 BECOME ACADEMIC IN NATURE NOR EVEN ANY SUBMISSIONS WERE MADE BEFORE US BY THE LD. AR O N THESE GROUNDS. THEREFORE THESE GROUNDS BECOME INFRUCTUOU S AND DO NOT SURVIVE FOR OUR SEPARATE ADJUDICATION. 7. NO ADDITIONAL GROUND AS HAVING BEEN RAISED IN TERMS OF RESIDUARY GROUND ACCORDINGLY THE SAID GROUND IS DISMISSED. 8 IN THE RESULT THE APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT TODAY ON 12 -04- 2010 SD/- SD/- (MAHAVIR SINGH) JUDICIAL MEMBER (A N PAHUJA) ACCOUNTANT MEMBER DATE : 12-04-2010 ITA NO.2149/AHD/2007 9 9 COPY OF THE ORDER FORWARDED TO : 1. M/S KHEMANI DISTILLERIES PVT. LTD. KACHIGAM ROA D RINGANWADA NANI DAMAN 2. THE ACIT VAPI CIRCLE VAPI 3. CIT CONCERNED 4. CIT(A) VALSAD 5. THE DR ITAT D BENCH AHMEDABAD 6. GUARD FILE BY ORDER DEPUTY REGISTRAR ASSISTANT REGISTRAR ITAT AHMEDABAD