AJMER VIDHYUT VITRAN NIGAM LTD., Ajmer V. ACIT, Ajmer

ITA 283/JPR/2009

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 5157 (ITAT-JAIPUR)
• Duration Of Justice: 7 year(s) 2 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-07-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2002-2003
• Appeal Filed On: 15-04-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DHK
• Assessee Lawyers: SHUBHASH PORWAL
• Keywords: Capital asset; Business income; Depreciation; Additional depreciation; Advance ruling; Cost of acquisition; Capital receipt; Unabsorbed depreciation
• Section: 234B; 115JB; 37(1); 10B; 32

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH HKKXPAN] YS[KK LNL; ,OA JH YFYR DQEKJ] U;KF;D LN L; DS LE{K BEFORE: SHRI BHAGCHAND, AM & SHRI LALIET KUMAR, JM VK;DJ VIHY LA-@ ITA NO. 283/JP/2009 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2002-03 M/S AJMER VIDYUT VITRAN NIGAM LTD., CITY POWER HOUSE, JAIPUR ROAD, AJMER. CUKE VS. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-2, AJMER. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AACCA 8562 E VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA-@ ITA NO. 385/JP/2009 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2002-03 ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-2, AJMER. CUKE VS. M/S AJMER VIDYUT VITRAN NIGAM LTD., CITY POWER HOUSE, JAIPUR ROAD, AJMER. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AACCA 8562 E VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA-@ ITA NO. 284/JP/2009 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2003-04 M/S AJMER VIDYUT VITRAN NIGAM LTD., CITY POWER HOUSE, JAIPUR ROAD, AJMER. CUKE VS. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-2, AJMER. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AACCA 8562 E VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT ITA 283/JP/2009 WITH OTHER CASES_ AJMER VVNL VS ACIT 2 VK;DJ VIHY LA-@ ITA NO. 386/JP/2009 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2003-04 ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-2, AJMER. CUKE VS. M/S AJMER VIDYUT VITRAN NIGAM LTD., CITY POWER HOUSE, JAIPUR ROAD, AJMER. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AACCA 8562 E VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA-@ ITA NO. 390/JP/2009 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2006-07 M/S AJMER VIDYUT VITRAN NIGAM LTD., CITY POWER HOUSE, JAIPUR ROAD, AJMER. CUKE VS. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-2, AJMER. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AACCA 8562 E VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA-@ ITA NO. 549/JP/2009 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2006-07 DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-2, AJMER. CUKE VS. M/S AJMER VIDYUT VITRAN NIGAM LTD., CITY POWER HOUSE, JAIPUR ROAD, AJMER. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AACCA 8562 E VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI SUNIL PORWAL & SHRI SHUBHASH PORWAL (CA) JKTLO DH VKSJ LS@ REVENUE BY : LQUOKBZ DH RKJH[K@ DATE OF HEARING : 29/06/2016 MN?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 14/07/2016 ITA 283/JP/2009 WITH OTHER CASES_ AJMER VVNL VS ACIT 3 VKNS'K@ ORDER PER: BENCH THESE ARE THE CROSS APPEALS, ONE BY THE ASSESSEE AN D ANOTHER BY THE REVENUE ARISE AGAINST THE ORDERS DATED 05/03/20 09 AND 09/04/2009 PASSED BY THE LD CIT(A), AJMER FOR THE A.Y. 2002-03 , 2003-04 AND 2006- 07, WHEREIN THE EFFECTIVE GROUNDS OF ASSESSEE AS WELL AS REVENUES APPEALS ARE REPRODUCED AS UNDER:- GROUNDS OF ASSESSEES APPEAL (ITA NO. 283/JP/2009 A .Y. 2002-03):- UNDER THE FACTS AND THE CIRCUMSTANCES OF THE CASE THE LD CIT(A), HAS ERRED IN MAKING THE FULL ADDITIONS/ACTIO NS CONFIRMED:- 1. THAT CONFIRMING THE VALIDITY OF ISSUE OF NOTICE U/S 147/148. 2. DISALLOWANCE THE DEPRECIATION OF RS.21,60,26,673/ - ON NON EXISTING ASSETS. 3. DISALLOWANCE OF DEPRECIATION OF RS. 11,63,37,224/ - U/S 43(1) EXPLANATION 10 OF INCOME TAX ACT. 4. THAT FURTHER UNDER THE GIVEN CIRCUMSTANCES THE PROVISIONS OF MAT (SEC. 115JB OF INCOME TAX ACT, 1961) ARE ALSO NOT APPLICABLE. FURTHER ALTERNATIVELY THE QUANTUM OF DEPRECIATING CONSIDERED FOR DISALLOWANCE SHOULD ALSO BE CONSIDERED AS PER BOOKS AS CLAIMED AND NOT AS PER INCOME TAX RETURNS/RATES. ITA 283/JP/2009 WITH OTHER CASES_ AJMER VVNL VS ACIT 4 5. THAT FURTHER IN VIEW OF DECISION OF M/S KWALITY BISCUITS LTD. VS. CIT (284 ITR 434 (SC) CHARGING OF INTEREST U/S 234B ON MAT TAX IS ALSO BAD IN LAW. GROUNDS OF REVENUES APPEAL (ITA NO. 385/JP/2009 A. Y. 2002-03):- IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A), AJMER HAS ERRED IN : 1. RESTRICTING THE DISALLOWANCE OF RS. 11,63,37,224/- ON NON EXISTING ASSETS AS AGAINST DISALLOWANCE OF RS. 18,99,41,047/- MADE BY THE A.O. U/S 43(1) OF THE I.T. ACT WHICH IS TO BE TAKEN FOR CALCULATION OF BOOK PROFIT U/S 115JB. GROUNDS OF ASSESSEES APPEAL (ITA NO. 284/JP/2009 A .Y. 2003-04):- UNDER THE FACTS AND THE CIRCUMSTANCES OF THE CASE THE LD CIT(A), HAS ERRED IN MAKING THE FULL ADDITIONS/ACTIO NS CONFIRMED:- 1. THAT CONFIRMING THE VALIDITY OF ISSUE OF NOTICE U/S 147/148. 2. DISALLOWANCE THE DEPRECIATION OF RS.16,20,20,005/ - ON NON EXISTING ASSETS. 3. DISALLOWANCE OF DEPRECIATION OF RS. 17,75,49,581/ - U/S 43(1) EXPLANATION 10 OF INCOME TAX ACT. 4. THAT FURTHER UNDER THE GIVEN CIRCUMSTANCES THE PROVISIONS OF MAT (SEC. 115JB OF INCOME TAX ACT, 1961) ARE ALSO NOT APPLICABLE. FURTHER ALTERNATIVELY THE QUANTUM OF DEPRECIATING CONSIDERED FOR DISALLOWANCE SHOULD ALSO BE ITA 283/JP/2009 WITH OTHER CASES_ AJMER VVNL VS ACIT 5 CONSIDERED AS PER BOOKS AS CLAIMED AND NOT AS PER INCOME TAX RETURNS/RATES. 5. THAT FURTHER IN VIEW OF DECISION OF M/S KWALITY BISCUITS LTD. VS. CIT (284 ITR 434 (SC) CHARGING OF INTEREST U/S 234B ON MAT TAX IS ALSO BAD IN LAW. GROUNDS OF REVENUES APPEAL (ITA NO. 386/JP/2009 A. Y. 2003-04):- IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A), AJMER HAS ERRED IN : 1. RESTRICTING THE DISALLOWANCE OF RS. 17,75,49,581/- ON NON EXISTING ASSETS AS AGAINST DISALLOWANCE OF RS. 31,61,86,877/- MADE BY THE A.O. U/S 43(1) OF THE I.T. ACT WHICH IS TO BE TAKEN FOR CALCULATION OF BOOK PROFIT U/S 115JB. GROUNDS OF ASSESSEES APPEAL (ITA NO. 390/JP/2009 A .Y. 2006-07):- UNDER THE FACTS AND THE CIRCUMSTANCES OF THE CASE THE LD CIT(A), HAS ERRED IN MAKING THE FULL ADDITIONS/ACTIO NS CONFIRMED:- 1. DISALLOWANCE THE DEPRECIATION OF RS.4,10,11,314/ - ON NON EXISTING ASSETS. 2. DISALLOWANCE OF DEPRECIATION OF RS. 15,24,53,227/ - U/S 43(1) EXPLANATION 10 OF INCOME TAX ACT. 3. THAT FURTHER UNDER THE GIVEN CIRCUMSTANCES THE PROVISIONS OF MAT (SEC. 115JB OF INCOME TAX ACT, 1961) ARE ALSO NOT APPLICABLE. FURTHER ALTERNATIVELY THE QUANTUM OF DEPRECIATING CONSIDERED FOR DISALLOWANCE SHOULD ALSO BE ITA 283/JP/2009 WITH OTHER CASES_ AJMER VVNL VS ACIT 6 CONSIDERED AS PER BOOKS AS CLAIMED AND NOT AS PER INCOME TAX RETURNS/RATES. 4. THAT FURTHER IN VIEW OF DECISION OF M/S KWALITY BISCUITS LTD. VS. CIT (284 ITR 434 (SC) CHARGING OF INTEREST U/S 234B ON MAT TAX IS ALSO BAD IN LAW. GROUNDS OF REVENUES APPEAL (ITA NO. 549/JP/2009 A. Y. 2006-07):- IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A), AJMER HAS ERRED IN : 1. DELETING THE DISALLOWANCE OF RS. 9,32,66,120/- O N ACCOUNT OF PRIOR PERIOD EXPENSES. 2. RESTRICTING THE DISALLOWANCE OF RS. 15,24,53,227/ - ON NON EXISTING ASSETS AS AGAINST DISALLOWANCE OF RS. 37,77,40,749/- MADE BY THE A.O. U/S 43(1) OF THE I.T. ACT WHICH IS TO BE TAKEN FOR CALCULATION OF BOOK PROFIT U/S 115JB. 2. ALL THE APPEALS ARE BEING HEARD TOGETHER, THEREF ORE, FOR THE SAKE OF CONVENIENCE, A COMMON ORDER IS BEING PASSED. 3. GROUND NO. 1 OF ALL THE ASSESSEES APPEALS FOR T HE A.Y. 2002-03 AND 2003-04 IS NOT PRESSED, THEREFORE, WE DISMISS TH E GROUND NO. 1 OF THE ASSESSEES APPEAL AS NOT PRESSED. 4. WE SHALL FIRST DECIDE THE APPEAL FOR THE ASSESSM ENT YEAR 2003-04 AS IN THE SAID APPEAL VIDE ORDER DATED 17/10/2008, THIS TRIBUNAL HAS DECIDED ISSUES AND THEREAFTER REMANDED THE MATTER B ACK TO THE FILE OF ITA 283/JP/2009 WITH OTHER CASES_ AJMER VVNL VS ACIT 7 THE ASSESSING OFFICER WITH CERTAIN OBSERVATIONS AND DIRECTIONS. WE DEEM IT APPROPRIATE TO REPRODUCE THE SAME, WHICH IS AS UN DER:- WE HAVE HEARD THE LD. DR AND PERUSED THE WRITTEN SUBMISSIONS BY THE ASSESSEE PLACED ON RECORD. THE OB JECTION OF THE A.O. IS THAT NO PHYSICAL EXISTENCE OF THE FI XED ASSETS WORTH RS. 115.21 CRORE IS AVAILABLE AND AMOUNT OF RS . 6.95 CRORE HAS BEEN CAPITALIZED IN THE CURRENT YEAR. THE EXPLANATION OF THE ASSESSEE IS THAT THE ASSESSEE TO OK THE ASSETS THROUGH FINANCIAL RESTRUCTURING PLAN AS ON A ND WERE BASIS AND FIXED ASSETS REGISTER OF THE ASSESSEE IS UNDER CONSIDERATION OF BEING COMPLETED. IT APPEARS THAT L IST OF FIXED ASSETS ON PHYSICAL VERIFICATION IS YET TO BE FINALI ZED BY THE ASSESSEE. IT IS NOT THE DEPRECIATION ONLY WHICH HAS THE EFFECT BUT THE NECESSARY ENTRIES, IF REQUIRED FOR LOSS OF FIXED ASSETS HAVE ALSO TO BE PASSED. THERE IS NOTHING ON RECORD I N THIS RESPECT, THEREFORE, IT IS PRE-MATURE FOR THE A.O. T O DISALLOW DEPRECIATION IN THE ABSENCE OF ANYTHING ON RECORD T HAT THE ASSETS ARE NOT USED FOR THE PURPOSE OF THE ASSESSEE . THEREFORE, THE A.O. IS DIRECTED TO TAKE INTO CONSIDE RATION THE LIST OF THE FIXED ASSETS PREPARED ON PHYSICAL VERIF ICATION AND EXAMINE WHETHER ANY LOSS OF FIXED ASSETS IS THERE AN D IF IT IS SO, NECESSARY ENTRIES AS PER PROVISIONS OF THE LAWS WITH RESPECT TO THE FIXED ASSETS SHOULD BE PASSED AND DE PRECIATION SHOULD BE ALLOWED IN ACCORDANCE WITH LAW. IF THE LIST/ FIXED ASSET REGISTER ON ACCOUNT OF PHYSICAL VERIFICATION OF ASSETS IS NOT FOUND READY IN THE IMPUGNED YEAR, THEN NECESSAR Y ITA 283/JP/2009 WITH OTHER CASES_ AJMER VVNL VS ACIT 8 ENTRIES, IF REQUIRED FOR LOSS OF FIXED ASSETS, IF A NY BE PASSED IN THE YEAR IN WHICH IT IS READY AND ALLOW DEPRECATION ACCORDINGLY, IN SUCH SITUATION, THE AO CANNOT DIST URB DEPRECIATION IN THE IMPUGNED YEAR. THE MATTER IS RES TORED TO THE FILE OF THE A.O. FOR FRESH ADJUDICATION BUT AFT ER PROVIDING ADEQUATE OPPORTUNITIES OF BEING HEARD TO THE ASSESS EE. THUS THE GROUND NO. 1 OF THE ASSESSEE IS ALLOWED FOR STAT ISTICAL PURPOSES. 5. AFTER THE REMAND ORDER IS PASSED BY THE TRIBUNAL , THE LD ASSESSING OFFICER HAS DECIDED THE ISSUE AGAINST THE ASSESSEE AND HELD AS UNDER:- CONSIDERING THE ALL MATERIAL FACTS OF THE CASE AND DISCUSSION MADE AS ABOVE, I AM OF THE VIEW THAT THE ASSESSEE IS NOT ENTITLED TO TAKE BENEFIT OF THE HONBLE ITATS ORDER DATED 20 /06/2008 FOR THE REASON THAT THE ASSESSEE HAS FAILED TO SUBMIT L IST OF ASSETS AS CLAIMED PHYSICALLY VERIFIED VIDE CERTIFICATE SUBMIT TED BEFORE THE DEPARTMENT ON 05/11/2008. IN CERTIFICATE THE ASSESS EE HAS CLAIMED THAT THE FIXED ASSETS OF M/S A.V.V.N.L. HAV E BEEN PHYSICALLY VERIFIED AT ALL THE CIRCLES BY THE CIRCL E SUPERINTENDENT ENGINEER FROM YEAR TO YEAR. NO LOOSES OF ANY FIXED ASSETS HAVE BEEN FOUND DURING SUCH VERIFICATION. HOWEVER, NOT SU BMITTED LIST OF ASSETS AS CLAIMED PHYSICALLY VERIFIED IN SPITE O F DIRECTION FROM THE ADDL.CIT AS WELL AS VARIOUS REQUEST LETTER ISSUED BY THE A.O. THUS, THE ASSESSEE HAS NOT FOLLOWED THE DIRECTION OF THE HONBLE ITAT. THE ASSESSEE HAS NOT SUBMITTED ANY SUPPORTING E VIDENCE AGAINST THE AUDIT OBSERVATION MADE BY THE AUDITOR F OR THE F.Y. ITA 283/JP/2009 WITH OTHER CASES_ AJMER VVNL VS ACIT 9 2002-03 (A.Y. 2003-04) OF THE COMPANY, PAGE 29 (10) (B) OF THE STATUTORY AUDIT REPORT FILED ALONGWITH THE RETURN, WHEREIN IT IS REPORTED THAT THE FIXED ASSETS OF RS. 115.21 CRORE TRANSFER THROUGH FRP WAS PHYSICALLY NOT AVAILABLE AT THE HEAD OFFICE LOCATION FROM THE ABOVE DISCUSSION, IT IS CLEAR THAT THE ASS ESSEE HAS SUBMITTED A CERTIFICATE BEFORE THE A.O. STATING THA T THE COMPANY HAS PHYSICALLY VERIFIED ALL ITS ASSETS, HOWEVER, NOT PRODUCED LIST OF FIXED ASSETS PREPARED ON PHYSICAL VERIFICATION AS D IRECTED BY THE HONBLE ITAT THEREFORE DEPRECIATION CLAIMED AGAINST NON EXISTING ASSETS IS NOT ALLOWABLE. DURING ASSESSMENT PROCEEDIN GS IN THE A.Y. 2005-06 THE LD AR HAS SUBMITTED DEPRECIATION C HART IN RESPECT OF ASSETS OF RS. 115.21 CRORES AS UNDER: A.Y. RATE OF DEPRECIATION AMOUNT (RS.) 2001-02 25% 288035564 2002-03 25% 216026673 2003-04 25% 162020005 2004-05 25% 121515004 2005-06 25% 91136253 2006-07 15% 41011314 2007-08 15% 34859617 LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE AND NO CO- OPERATIVE ATTITUDE ADOPTED BY THE ASSESSEE I AM INC LINED TO ADD THE DEPRECIATION AS CALCULATED ABOVE BY THE A.R. RS . 16,20,20,005/- TO THE TOTAL INCOME OF THE ASSESSEE. THUS, LOOKING THE PAST HISTORY OF THE CASE ADDITION OF RS. 16,20, 20,005/- IS HEREBY MADE AGAINST NON EXISTING ASSETS AS MENTIONE D ABOVE. ITA 283/JP/2009 WITH OTHER CASES_ AJMER VVNL VS ACIT 10 6. BEING AGGRIEVED BY THE ORDER PASSED BY THE LD AS SESSING OFFICER, THE ASSESSEE CARRIED THE MATTER BEFORE THE LD CIT(A) , WHO HAD CONFIRMED THE ADDITION BY OBSERVING AS UNDER:- 3.3 IN ANNEXURE-I TO THE AUDITORS REPORT, THE STAT UTORY AUDITOR OF THE APPELLANT COMPANY HAS MADE THE FOLLOWING OBSERVATION:- THE COMPANY HAS NOT MAINTAINED PROPER RECORD SHOWI NG THE FULL PARTICULARS INCLUDING QUANTITATIVE DETAILS & S ITUATION OF FIXED ASSETS AS TRANSFERRED TO IT THROUGH FINANCIAL RESTR UCTURING PLAN NOTIFIED VIDE NOTIFICATION NO. F-15(L) ENERGY/2000/P ART U DATED 17.01.2002 AND RAJ. BILL/2000/1717 DATED 18.01.2002 . NO PHYSICAL IDENTIFICATION OF ASSETS TRANSFERRED HAS B EEN DONE AND AS SUCH NO PHYSICAL VERIFICATION OF THE ASSETS COUL D BE DONE. THE DETAIL OF THE SAME IS MAINTAINED BY RVPN LIMITE D. FOR THE ASSETS CREATED DURING THE YEAR THE COMPANY IS OBLIG ED TO MAINTAINED FIXED ASSETS REGISTER WHICH HAS NOT BEEN MAINTAINED. HENCE, WE ARE NOT IN A POSITION TO COMM ENT AS REGARDS DISCREPANCIES IF ANY IN RELATION TO THE PHY SICAL EXISTENCE OF THE ASSETS AND ITS BOOK VALUE. NO PHYS ICAL EXISTENCES OF THE ASSETS AT HEAD OFFICE FOR AN AMOU NT OF RS. 115.21 CRORES AS TRANSFERRED FROM FRP AS ALSO OF RS .4.30 CRORES SHOWN AS ASSET CREATED IN THE YEAR 2000-01 A S ALSO OF RS. 7.19 CRORES SHOWN AS ASSET CREATED DURING THE Y EAR 2001- 02 IS AVAILABLE. DURING THE YEAR 2002-03 AN AMOUNT OF RS.6.95 CRORES HAS BEEN CAPITALIZED OUT OF THE TOTAL EXPENS ES AT HEAD OFFICE LOCATIONS. NO PHYSICAL EXISTENCE OF THE ASSE TS IN RELATION TO THE ABOVE FIGURE ARE AVAILABLE. 3.4 THE MANAGEMENT REPLIES ON THE QUALIFICATIONS BY THE STATUTORY AUDITORS IN THEIR AUDITORS REPORT ON THE ANNUAL ACCOUNT 2001-2002 IN THIS REGARD ARE AS FOLLOWS:- ITA 283/JP/2009 WITH OTHER CASES_ AJMER VVNL VS ACIT 11 'A BLOCK ASSETS REGISTER INDICATING THE DETAILS ON YEARLY BASIS HAS BEEN IN EXISTENCE IN ERSTWHILE RSEB. THE EXERCIS E FOR PREPARATION AND MAINTENANCE OF DETAILED ASSETS REGI STER IN DESIRE FORMAT HAS SINCE BEEN TAKEN IN HAND AFTER FO RMATION OF THE COMPANY ON UNBUNDLING OF RSEB. AS THE PREPARATIO N OF FIXED ASSETS REGISTER THOROUGH THE CONSULTANT APPOI NTED FOR THE PURPOSE IS IN PROGRESS A COMMITTEE OF COMPANY OFFIC IALS HAS ALSO BEEN LOOKING AFTER THE WORK. THESE AMOUNTS REPRESENT THE CAPITALIZATION OF EXPE NSES (VIZ EMPLOYEE COST, ADMN. & GEN EXP.) WHICH IS AS PER NIGA MS ACCOUNTING POLICY. HENCE NO PHYSICAL EXISTENCE POSS IBLE IN RESPECT OF THESE AMOUNTS. 3.5 IN SUCH A SITUATION, IT IS NOT CLEAR AS TO ON W HAT BASIS THE CHIEF ACCOUNTS OFFICER HAS FILED A CERTIFICATE TO T HE EFFECT THAT ALL THE FIXED ASSETS HAVE BEEN VERIFIED AND NO LOSS OF ASSETS IS FOUND DURING SUCH VERIFICATION. SINCE THE APPELLANT FAILED TO FURNISH THE FIXED ASSETS REGIST ER BEFORE THE AO, IT WAS NOT POSSIBLE FOR THE AO TO VERIFY WHET HER THE CLAIM OF THE APPELLANT IS CORRECT OR NOT. I, TH EREFORE, HOLD THAT THE AO HAS RIGHTLY MADE THE DISALLOWANCE O F RS. 16,20,20,005/- AND THE SAME IS CONFIRMED. GROUND NO .1 IS THUS DISMISSED. 7. NOW THE ASSESSEE IS IN APPEAL BEFORE US. THE LD AR OF THE ASSESSEE HAS SUBMITTED THAT THE ASSESSEE COMPANY WAS INCORPORATED ON 19.04.2000 AS PER RAJASTHAN STATE EXTRA ORDINARY GA ZETTE DATED 18.01.2002 WHEREBY FOR RAJASTHAN POWER SECTOR REFORMS TRANSFER SCHEME 2000 CAME INTO EFFECT. THE ERSTWHILE RAJASTHA N STATE ELECTRICITY (RSEB) WAS UNBUNDLED INTO VARIOUS COMPANIES, INCLUDI NG THE ASSESSEE. ITA 283/JP/2009 WITH OTHER CASES_ AJMER VVNL VS ACIT 12 WHEN THESE COMPANIES WERE FORMED CERTAIN ASSETS AND LIABILITY AND INCOME AND EXPENDITURE WERE TRANSFERRED TO THESE COM PANIES OF ERSTWHILE RSEB WHICH WERE SUBJECT TO RECONCILIATION. ACCORDINGLY IN TERMS OF TRANSFER SCHEME, THE ASSESSEE COMPANY ALSO RECEI VED FIXED ASSETS IN ITS VARIOUS CIRCLES AND HEAD OFFICE AS ON 19.07.200 0. THE FIXED ASSETS WERE VALUED WORTH RS.115.21 CRORE WAS ALSO TRANSFERRED THROUGH FRP (FINANCIAL RESTRUCTURING PLAN BEING ON ACCOUNT OF C APITALIZATION OF INTEREST & FINANCIAL CHARGES AMOUNT ON FIXED ASSETS VALUE). LD AR FURTHER SUBMITTED THAT THE STATUTORY AUDITOR FOR THE FINANC IAL YEAR 2002-03 (ASST, YEAR 2003-04) OF THE COMPANY, PAGE 29(10)(B) OF THE STATUTORY AUDIT REPORT FILED ALONG WITH THE RETURN, WHEREIN IT IS REP ORTED THAT 'THE FIXED ASSETS OF RS. 115.21 CRORE TRANSFER THROUGH FRP WAS PHYSICALLY NOT AVAILABLE AT THE HEAD OFFICE LOCATION.' IN A.Y. 200 3-04 THE THEN LD. A.O. CONSIDERED THIS ISSUE & DISALLOWED A SUM OF RS. 23.0 4 CRORE BEING 20% DEPRECIATION ON FIXED ASSET WORTH RS. 115.21 CRORE C ONSIDERING THE SAME AS NOT PHYSICALLY AVAILABLE. LD. CIT (A) IS APPEAL O RDER NO. 02/2006-07 DATED 14.09.2007 CONFIRMED THE ADDITION. HOWEVER HON 'BLE ITAT, JAIPUR IN IT'S ORDER DATE 20.06.2008 (ITA NO. 867/JP/2007) FOR A.Y. 2003-04 AFTER CONSIDERING THE FACTS HAS CRYSTALLIZED THE SI TUATION AND HAS COMMENTED AS BELOW. ITA 283/JP/2009 WITH OTHER CASES_ AJMER VVNL VS ACIT 13 'IT APPEARS THAT LIST OF FIXED ASSETS ON PHYSICAL V ERIFICATION IS YET TO BE FINALIZED BY THE ASSESSEE. IT IS NOT THE DEPR ECIATION ONLY WHICH HAS THE EFFECT BUT THE NECESSARY ENTRIES, IF REQUIRED FOR LOSS OF FIXED ASSETS HAVE ALSO TO BE PASSED. THERE IS NOTHING ANY RECORD IN THIS RESPECT: THEREFORE, IT IS PRE-MATURE FOR THE A.O. TO DISALLOW DEPRECIATION IN THE ABSENCE OF ANY THING O N RECORD THAT THE ASSETS ARE NOT USED FOR THE PURPOSE OF THE ASSE SSEE. THEREFORE, THE AO IS DIRECTED TO TAKE INTO CONSIDER ATION THE LIST OF THE FIXED ASSETS PREPARED ON PHYSICAL VERIFICATI ON AND EXAMINE WHETHER ANY LOSS OF FIXED IS THERE AND IF IT IS SO, NECESSARY ENTRIES AS PER PROVISIONS OF THE LAWS WITH RESPECT TO THE FIXED ASSETS SHOULD BE PASSED AND DEPRECIATION SHOULD BE ALLOWED IN ACCORDANCE WITH LAW. IF THE LIST/FIXED ASSET REGIST ER ON ACCOUNT OF PHYSICAL VERIFICATION OF ASSETS IS NOT FOUND READY IN THE IMPUGNED YEAR, THEN NECESSARY ENTRIES, IF REQUIRED FOR LOSS OF FIXED ASSETS, IF ANY BE PASSED IN THE YEAR I WHICH IT IS READY AND ALLOW DEPRECIATION ACCORDINGLY. IN SUCH SITUATION T HE AO CANNOT DISTURB DEPRECIATION IN THE IMPUGNED YEAR. THE MATT ER IS RESTORED TO THE FILE OF THE AO FOR FRESH ADJUDICATI ON BUT AFTER PROVIDING THE ADEQUATE OPPORTUNITIES OF BEING HEARD TO THE ASSESSEE.' THUS THE DIRECTIONS OF HON'BLE ITAT ON THE ISSUE FOR A.Y. 2003-04 WERE VERY SPECIFIC THAT THE DISALLOWANCE OF DEPRECIATION CAN BE MADE ONLY ON THOSE FIXED ASSETS FOR WHICH LOSS HAS BEEN CLAIMED I N VALUE IN THE BOOKS OTHERWISE THE DEPRECIATION IS NOT DISALLOWABLE. THE A. O. WITHOUT CONSIDERING THE FACT THAT THE DIRECTION OF ITAT WAS T O VERIFY FROM BOOKS REGARDING THE LOSS CLAIMED FOR FIXED ASSETS AND THE N CONSIDER THE ITA 283/JP/2009 WITH OTHER CASES_ AJMER VVNL VS ACIT 14 DISALLOWANCE OF DEPRECIATION PRORATA HOWEVER THE A.O . ONLY INSISTED TO SUBMIT LIST OF ASSETS AS CLAIMED PHYSICALLY VERIFIE D AND FOR THIS REASON DISALLOWED THE DEPRECIATION. THUS THE A.O. HAS WRONGLY INTERPRETED THE DIRECTIONS OF ITAT WHEREIN EVEN THE ITAT HAS ACCEPTE D THE BLOCK OF FIXED ASSETS HOWEVER THEY HAVE DIRECTED TO DISALLOW THE DEP RECIATION ONLY ON THOSE ASSETS WHICH FOR LOSS OF ASSET CLAIMED IN THE BOOKS. THE ASSESSEE COMPANY SUBMITTED THE CERTIFICATE OF VERIFICATION O F FIXED ASSETS OF ALL CIRCLES BY CSE AND THE SAME CANNOT BE DENIED. IT IS WORTH TO NOTE THAT AS PER AUDITED ACCOUNTS & AS PER STATUTORY AUDITORS REPORT IT IS CLEAR THAT NO 'LOSS OF FIXED ASSETS' ARE THERE. FURTHER AS PER SECTION 32 OF INCOME TAX ACT, 1961 IT HAS BEEN MADE CLEAR THAT 'IN RESPECT OF DEPRECIATION OF ASSETS OWNED . WHOLLY OR PARTLY. BY THE ASSESSEE AND USED FOR THE PURPOSE OF BUSINESS OR PROFESSION. THE DEDUCTION FOR DEPRECIA TION AS PER RULE 5(1A) AS APPENDIX 1(A)' IS TO BE ALLOWED . THE LD CIT (A) IN ITS ORDER HAS DOUBTED THE BASIS OF ISSUANCE OF CERTIFICATE OF VERIFICATION OF FIXED ASSETS AND CER TIFICATE REGARDING NO LOSS OF ASSETS AS ISSUED BY CHIEF ACCOUNTS OFFICER AND O NLY FOR THIS REASON HAS CONFIRMED THE ADDITION FOR DISALLOWANCE OF DEPRECIAT ION. EVEN NO OPPORTUNITY GRANTED TO JUSTIFY THE DOUBT WHEN THE CE RTIFICATE CLEARLY ITA 283/JP/2009 WITH OTHER CASES_ AJMER VVNL VS ACIT 15 MENTIONS FOR VERIFICATION OF FIXED ASSETS AND NO LO SS THERE IN BOOKED IN ACCOUNTS. FURTHER THE ASSETS WERE ALLOCATED BY THE S TATE GOVERNMENT FROM ERSTWHILE RSEB AND ITS EXISTENCE IN A GOVERNMEN T OWNED COMPANY CANNOT BE DOUBTED. FURTHER EVEN THE STATUTORY AUDIT ORS IN ITS REPORT HAS MENTIONED FOR NO LOSS OF FIXED ASSETS. THUS THE DEPR ECIATION AS DISALLOWED FOR THE YEAR BASED ON ASSESSMENT PROCEEDI NGS (SET-ASIDE) OF A.Y. 2003-04 IS REQUESTED TO BE DELETED. 8. AT THE OUTSET, THE LD DR HAS RELIED UPON THE ORD ER PASSED BY THE LD CIT(A) AND SUBMITTED THAT THE ASSESSEE HAS FAILED TO PROVIDE LIST OF FIXED ASSETS AND ALSO FAILED TO VERIFY FIXED ASSETS, IN T ERMS OF THE ORDER, THEREFORE, THE ASSESSEE IS NOT ENTITLED TO ANY DEPR ECATION AS CLAIMED BY IT. 9. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. WE HA VE HEARD THE MATTER ON 16/6/2016. DURING THE COURSE OF HEARING, IT WAS S UBMITTED ON BEHALF OF THE ASSESSEE THAT THE ERSTWHILE RAJASTHAN STATE E LECTRICITY BOARD WAS NOT ASSESSABLE TO INCOME TAX AND THEREFORE, IT WAS N OT FILING THE INCOME TAX RETURN. HOWEVER, THEREAFTER ON GOING THROUGH THE RECORD AND THE JUDGMENT PASSED BY THE HON'BLE HIGH COURT AND HON'B LE SUPREME COURT, IT TRANSPIRES THAT THE RAJASTHAN STATE ELECTRICITY BOARD IS AN TAXABLE ITA 283/JP/2009 WITH OTHER CASES_ AJMER VVNL VS ACIT 16 ENTITY AND THEREFORE THE MATTER WAS FIXED FOR HEARIN G ON 29/6/2016 FOR THE PURPOSES OF CLARIFICATION. ON 29/6/2016, THE LD AR ALONGWITH REPRESENTATIVES OF THE ASSESSEE WERE PRESENT IN THE COURT. LD AR SUBMITTED THAT THE BOARD HAVE FILED THE RETURN OF I NCOME FOR THE ASSESSMENT YEAR 2001-02 AND HAVE ALSO PROVIDED THE CHART FOR DEPRECIATION IN RESPECT OF FIXED ASSETS OF THE ASSE SSEE. 9.1 EVEN OTHERWISE SECTION 80 OF THE ELECTRICITY SUP PLY ACT, 1948 PROVIDES AS UNDER:- 80. PROVISION RELATING TO INCOME TAX AND SUPER TAX.- (1) FOR THE PURPOSES OF THE INDIAN INCOME-TAX ACT, 1922 (XI OF 1922), 4 THE BOARD SHALL BE DEEMED TO BE A COMPANY WITHIN THE MEANING OF THAT ACT AND SHALL BE LIABLE TO INCO ME TAX AND SUPER TAX ACCORDINGLY ON ITS INCOME, PROFITS AN D GAINS. (2) THE STATE GOVERNMENT SHALL NOT BE ENTITLED TO AN Y REFUND OF ANY SUCH TAXES PAID BY THE BOARD. IN VIEW OF THE SPECIFIC PROVISIONS UNDER THE ELECTRI CITY SUPPLY ACT, 1948, A BOARD CONSTITUTED UNDER THE SAID ACT AND THE BOAR D IS LIABLE TO PAY TAX UNDER THE PROVISIONS OF INCOME TAX ACT, 1961 AND THE REFORE, THE BOARD WAS REQUIRED TO FILE INCOME TAX RETURN AND THE JUDGM ENT PASSED BY THE HONBLE RAJASTHAN HIGH COURT IN THE CASE OF RAJASTH AN STATE ELECTRICITY BOARD VS. DCIT (1993) 200 ITR 434 CLEARLY DEALS THAT THE RAJASTHAN STATE ELECTRICITY BOARD IS A GOVERNMENT COMPANY ASS ESSABLE UNDER THE ITA 283/JP/2009 WITH OTHER CASES_ AJMER VVNL VS ACIT 17 I.T. ACT. FURTHER IN THE MATTER OF CIT VS. RAJASTHAN STATE ELECTRICITY BOARD (2007) 160 TAXMAN 19, THE HONBLE JURISDICTIO NAL HIGH COURT HAS DEALT RAJASTHAN STATE ELECTRICITY BOARD AS A GOVERN MENT COMPANY AND IS ALSO SUBJECT TO THE RIGOROUS OF THE INCOME TAX ACT. THEREFORE, WE ARE OF THE VIEW THAT THE RAJASTHAN STATE ELECTRICITY BOARD WAS A GOVERNMENT COMPANY AND WAS SUBJECT TO THE INCOME TAX ACT. 9.2 SINCE THE RAJASTHAN STATE ELECTRICITY BOARD WAS A GOVERNMENT UNDERTAKING AND WAS AN INCOME TAX ENTITY, THEREFORE, IT WAS HAVING BLOCK OF ASSETS AND FIXED ASSETS. ADMITTEDLY BY THE GAZET TE NOTIFICATION DATED 18/1/2002, THE RAJASTHAN STATE ELECTRICITY BOARD WAS DIVIDED INTO FIVE UNDERTAKINGS AND THE TOTAL ASSETS OF THE RAJASTHAN STATE ELECTRICITY BOARD WERE DIVIDED IN VARIOUS COMPANIES AND THE GROSS FIXE D ASSETS OF RS. 1029 CRORES CAME TO THE SHARE OF THE ASSESSEE. IT I S THE CONTENTION OF THE LD AR THAT IT IS NOT POSSIBLE FOR THE ASSESSEE TO PHYSICALLY VERIFY THE INDIVIDUAL ASSETS AS SOUGHT BY THE LD ASSESSING OFF ICER AS THE FIXED ASSETS TRANSFERRED TO THE ASSESSEE WERE FORMING PART OF THE BLOCK OF ASSETS PRIOR TO ITS TRANSFER WITH THE RACB. AS PER THE BALANCE SH EET OF THE RAJASTHAN STATE ELECTRICITY BOARD, THE ALLOWABLE DEPRECIATION UP TO 19/7/2000 WAS MENTIONED AS RS.1,04,82,30,121/-.SINCE BLOCK OF ASS ETS WERE TRANSFERRED TO THE ASSESSEE, THEREFORE, THE INSISTENCE OF THE L D ASSESSING OFFICER FOR ITA 283/JP/2009 WITH OTHER CASES_ AJMER VVNL VS ACIT 18 PHYSICAL VERIFICATION OF THE ASSETS FOR THE PURPOSE S OF DEPRECIATION, IN OUR VIEW, WAS NOT WARRANTED. IN OUR VIEW, ONCE THE ASSETS A RE FORMING PART AND PARCEL OF THE BLOCK OF ASSETS, WHICH WERE TRANSF ERRED TO THE ASSESSEE FROM RAJASTHAN STATE ELECTRICITY BOARD, THE PHYSICA L VERIFICATION FOR THE PURPOSES OF DEPRECIATION MAY NOT BE REQUIRED AND TH EREFORE, THE ASSESSEE IS ENTITLED TO DEPRECIATION ON THE WRITTEN DOWN VALUE OF THE ASSETS A PER INCOME TAX ACT 1961, SUBSEQUENT TO THE TRANSFER FROM THE ASSETS FROM RAJASTHAN STATE ELECTRICITY BOARD. 9.3 IT IS AN ADMITTED CASE THAT THE ASSESSEE COMPAN Y WAS CONSTITUTED UNDER THE ACT OF RAJASTHAN AND UNDER THE STATUTORY TRANSFER SCHEME, THEREFORE, IN VIEW OF SECTION 43 OF THE ACT, TRANSFE R OF ASSETS HAD BEEN FALL WITHIN THE REALM OF TRANSFER AS ENVISAGED UNDER THE ACT. AS PER EXPLANATION-6 OF SECTION 43(1), THE ACTUAL BASIS OF TRANSFEREE COMPANY WOULD HAVE TO BE WRITTEN DOWN VALUE OF THE TRANSFEROR COMPANY MEANING THEREBY THE BLOCK OF ASSETS, WHICH WAS TRANSFERRED B Y THE RAJASTHAN ELECTRICITY BOARD WITH THE ORIGINAL COST OF ACQUISIT ION, SHALL BE DETERMINED THE WRITTEN DOWN VALUE FOR THE ASSESSEE COMPANY. THE H ONBLE DELHI HIGH COURT IN THE CASE OF DALMIA CERAMIC INDUSTRIES LTD. VS. CIT (2005) 277 ITR 219 HAS HELD THAT WHAT WOULD BE THE ACTUAL C OST OF THE TRANSFEREE COMPANY ON THE DATE OF TRANSFER IS INDIC ATED IN SECTION 43(1), ITA 283/JP/2009 WITH OTHER CASES_ AJMER VVNL VS ACIT 19 EXPLANATION-6, THUS THE ACTUAL COST OF TRANSFEREE C OMPANY WILL BE WRITTEN DOWN VALUE OF THE HOLDING COMPANY. 9.4 SINCE THE ORIGINAL COST OF ACQUISITION OF THE T RANSFEROR COMPANY, IS DETERMINED, SIMILARLY, THE WRITTEN DOWN VALUE OF THE TRANSFEROR COMPANY IS ALSO AVAILABLE WITH THE ASSESSING OFFICER, THEREF ORE, THE LD ASSESSING OFFICER WAS ONLY REQUIRED TO ALLOW THE APPLICATION DE PRECIATION ON THE WRITTEN DOWN VALUE OF THE ASSETS ACQUIRED BY THE ASS ESSEE FROM THE TRANSFEROR COMPANY (RACB). THE RELEVANT PORTION OF T HE JUDGMENT IS REPRODUCED HEREINBELOW: 8. THE ONLY ISSUE BEFORE THIS COURT IS WHETHER TH E WRITTEN DOWN VALUE OF THE HOLDING COMPANY IS TO BE TAKEN AS ACTU AL COST OF THE ASSESSEE OR THE AMOUNT PAID BY THE ASSESSEE TO THE HOLDING COMPANY? CHAPTER IV OF THE ACT REFERS TO COMPUTATION OF BUSINESS INCOME AND SECTION 43 IS RE QUIRED TO BE EXAMINED FOR THE PURPOSE OF DECIDING THIS MATTER . SECTION 43(1) OF THE ACT WHICH DEFINES ACTUAL COST READS AS UNDER: ' (1) ' ACTUAL COST' MEANS THE ACTUAL COST OF THE A SSETS TO THE ASSESSEE, REDUCED BY THAT PORTION OF THE COST THERE OF, IF ANY, AS HAS BEEN MET DIRECTLY OR INDIRECTLY BY ANY OTHER PERSON OR AUTHORITY : PROVIDED THAT WHERE THE ACTUAL COST OF AN ASSET, B EING A MOTOR-CAR WHICH IS ACQUIRED BY THE ASSESSEE AFTER T HE 31ST DAY OF MARCH, 1967 BUT BEFORE THE 1ST DAY OF MARCH, 1975, AND IS USED OTHERWISE THAN IN A BUSINESS OF RUNNING IT ON HIRE FOR TOURISTS, EXCEEDS TWENTY-FIVE THOU SAND RUPEES, THE EXCESS OF THE ACTUAL COST OVER SUCH AMOUNT SHALL BE IGNORED, AND THE ACTUAL COST THEREOF SHALL BE TAKEN TO BE TW ENTY-FIVE THOUSAND RUPEES.' 9. WHAT IS WRITTEN DOWN VALUE IS DEFINED IN CLAUSE (6) OF SECTION 43 WHICH READS AS UNDER : ' ' WRITTEN-DOWN VALUE' MEANS ITA 283/JP/2009 WITH OTHER CASES_ AJMER VVNL VS ACIT 20 (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 PREV IOUS YEAR, THE ACTUAL COST TO THE ASSESSEE LESS ALL DEPRECIATI ON ACTUALLY 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 ANY EXECUTIVE ORDERS ISSUED WHEN THE INDIA N INCOME-TAX ACT, 1886 (2 OF 1886), WAS IN FORCE.' 10. IT MAY BE NOTED THAT SUB-CLAUSE (A) OF CLAUSE (6) WOULD NOT APPLY IN THE INSTANT CASE AS THAT WOULD APPLY FOR T HE ASSESSMENT YEAR 1975-76. SUB- CLAUSE (B) CLEARLY IN DICATES THAT THE WRITTEN DOWN VALUE MEANS THE ACTUAL COST T O THE ASSESSEE LESS ALL DEPRECIATION ACTUALLY ALLOWED TO HIM UNDER THE ACT. IN THE INSTANT CASE EXPLANATION 2 TO CLAUS E (6) OF SECTION 43 IS RELEVANT AND IS REPRODUCED HEREUNDER : ' EXPLANATION 2.WHEN ANY CAPITAL ASSET IS TRANSFE RRED BY A HOLD ING COMPANY TO ITS SUBSIDIARY COMPANY OR BY A SUBSIDIARY COMPANY TO ITS HOLDING COMPANY, THEN, IF THE CONDITIONS OF CLAUSE (IV), OR, AS THE CASE MAY BE, OF CLAUSE (V) OF SECTION 47, ARE SATISFIED, THE WRITTEN DOWN VALUE OF THE TRANSFERRED CAPITAL ASSET TO THE TRANSFEREE-COMPANY SHALL BE TAKEN TO BE THE SAME AS IT WOULD HAVE BEEN IF THE T RANSFEROR- COM PANY HAD CONTINUED TO HOLD THE CAPITAL ASSET FO R THE PURPOSE OF ITS BUSINESS.' 11. THERE IS NO DISPUTE THAT THE CASE FALLS UNDER CLAUSE (IV) OF SECTION 47. THEREFORE, IT IS CLEAR THAT THE ACTUAL COST WOULD BE THE WRITTEN DOWN VALUE OF THE TRANSFEROR-COMPANY. T HIS ASPECT IS REQUIRED TO BE BORNE IN MIND WHILE CONSID ERING THE QUESTION. WE WILL NOW HAVE TO TURN TO EXPLANATION 6 TO SECTION 43(1) WHICH READS AS UNDER : ' EXPLANATION 6.WHEN ANY CAPITAL ASSET IS TRANSFE RRED BY A HOLD ING COMPANY TO ITS SUBSIDIARY COMPANY, OR BY A SUBSIDIARY COMPANY TO ITS HOLDING COMPANY, THEN, IF THE CONDITIONS OF CLAUSE (IV) OR, AS THE CASE MAY BE, O F CLAUSE (V) OF SECTION 47 ARE SATISFIED, THE ACTUAL COST OF THE TRANSFERRED CAPITAL ASSET TO THE TRANSFEREE-COMPANY SHALL BE TA KEN TO BE THE SAME AS IT WOULD HAVE BEEN IF THE TRANSFEROR-CO MPANY HAD CONTINUED TO HOLD THE CAPITAL ASSET FOR THE PUR POSES OF ITS BUSINESS.' ITA 283/JP/2009 WITH OTHER CASES_ AJMER VVNL VS ACIT 21 12. IT IS CLEAR THAT WHAT WOULD BE THE ACTUAL COST TO THE TRANSFEREE COMPANY ON THE DATE OF TRANSFER IS INDIC ATED IN SECTION 43(1), EXPLANATION 6. THUS, THE ACTUAL COST TO THE TRANSFEREE-COMPANY WILL BE THE WDV OF THE HOLDING C OMPANY (TRANSFEROR-COMPANY). 13. THE ASSESSEE BASED ITS SUBMISSION RELYING ON M AHARANA MILLS P. LTD. V. ITO [1959] 36 ITR 350 (SC) AND SAHARANPUR ELECTRIC SUPPLY CO. LTD. V. CIT [1992] 194 ITR 294 (SC). THE ASSESSEE HAS ALSO RELIED ON CIBA OF INDIA LTD. V. CIT [1993] 202 ITR 1 (BOM) AS ALSO ON CIT V. HIDES AND LEATHER PRODUCTS P . LTD. [1975] 101 ITR 61 (GUJ). IT IS REQUIRED TO BE NOTED THAT THE REVENUE AS WELL AS THE ASSESSEE PLACED RELIANCE ON THE DECISION OF THE APEX COURT IN THE CASE OF SAHARANPU R ELECTRIC SUPPLY CO. LTD. V. CIT [1992] 194 ITR 294 . THE APEX COURT CONSIDERED THE DECISIONS IN MAHARANA MILLS P. LTD. V. ITO [1959] 36 ITR 350 (SC) AND CIT V. HIDES AND LEATHER PRODUCTS P. LTD. [1975] 101 ITR 61 (GUJ) AMONGST OTHER CASES. THE APEX COURT AFTER EXAMINING THE PROVISIONS IN DETAIL POIN TED OUT AT PAGE 315 AS UNDER : ' EXPLANATION 6 OFFERS NO DIFFICULTY AS THE RELATI ONSHIP OF ' PARENT' AND ' SUBSIDIARY' BETWEEN THE COMPANIES INV OLVED IN THE TRANSFER, FOR THE PURPOSES OF THIS CLAUSE, HAS TO BE DETERMINED AS AT THE TIME OF THE TRANSFER OF THE AS SET AND WILL NOT BE A WOBBLING OR FLUCTUATING ONE AS SUGGES TED BY COUNSEL FOR THE ASSESSEE. . .' 14. THUS IN VIEW OF EXPLANATION 6 THE WRITTEN DOWN VALUE OF THE HOLDING COMPANY IS REQUIRED TO BE TAKEN INTO CONSID ERATION. 15. LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THA T THE DIFFERENCE BETWEEN THE WDV AND THE PRICE RECEIVED F OR THE PROPERTY HAS BEEN TAXED IN THE HANDS OF THE HOLDING COMPANY IN THE RELEVANT ASSESSMENT YEARS AND THERE IS NO DISPUTE ON THIS ISSUE. IN VIEW OF THIS, IT WAS SUBM ITTED THAT THE REVENUE CANNOT HAVE TAX BENEFIT AT BOTH THE PLA CES, NAMELY, IN THE HANDS OF THE PARENT COMPANY AND AT T HE HANDS OF THE ASSESSEE. IT WAS THUS SUBMITTED THAT T HERE IS NO EVASION OF TAX. 16. ON BEHALF OF THE ASSESSEE IT WAS CONTENDED THA T ACTUAL COST IS NOT STATIC AND IT IS REQUIRED TO BE DETERMINED Y EAR TO YEAR. NO DOUBT THERE MAY BE A SITUATION WHICH MAY REQUIRE THE ASSESSING OFFICER TO EXAMINE THE CASE AND RE-DETERM INE THE ACTUAL COST. IN FACT THE APEX COURT HAS CONSIDERED THIS ASPECT ITA 283/JP/2009 WITH OTHER CASES_ AJMER VVNL VS ACIT 22 AT PAGE 306 AND POINTED OUT INSTANCES. THE APEX COU RT AT PAGE 309 (SEE [1992] 194 ITR) AS UNDER: 'IN PRINCIPLE, THEREFORE, WE ARE UNABLE TO ACCEPT THE CONTENTION THAT THE ACTUAL COST CANNOT BE DETERMINE D YEAR AFTER YEAR ON THE FACTUAL OR LEGAL POSITION APPLICA BLE FOR THE RELEVANT PREVIOUS YEAR AND THAT THE ACTUAL COST ONC E DETERMINED CANNOT BE ALTERED EXCEPT IN THE THREE SI TUATIONS OUTLINED BY COUNSEL WHERE THE ORIGINAL FIGURE ITSEL F REQUIRES A MODIFICATION.' 9.5 IN VIEW THEREOF, THIS GROUND OF THE ASSESSEES A PPEAL IS ALLOWED. 9.6 HOWEVER, WE WOULD LIKE TO ADD THAT THE MAINTENANCE OF FIXED ASSETS REGISTER IS NECESSARY FOR THE SMOOTH FUNCTIO NING OF THE ELECTRICITY DISTRIBUTION BUSINESS AND OTHER ACTIVITIES OF THE A SSESSEE. WE FAIL TO APPRECIATE THAT DESPITE THE ISSUANCE OF DIRECTION B Y THE TRIBUNAL WAY BACK ON 20/6/2008 TILL DATE THE FIXED ASSETS REGIST ER HAVE NOT BEEN MAINTAINED AND PHYSICAL VERIFICATION OF THE ASSETS HAVE NOT BEEN DONE. THOUGH WE HAVE HELD THAT THE ASSESSEE IS ENTITLED FOR DEPRECATION ON THE WRITTEN DOWN VALUE OF THE TRANSFERRED ASSETS BUT NON ETHELESS IT IS THE DUTY OF THE ASSESSEE TO MAINTAIN AND KEEP THE FIXED ASSETS REGISTER. WE WILL APPRECIATE IF THE ASSESSEE COMPLETES THIS EXERC ISE OF MAINTAINING THE FIXED ASSETS REGISTER BY ACTUAL VERIFICATION OF THE ASSETS WITHIN A PERIOD OF ONE YEAR FROM TODAY. IF THE PHYSICAL VERIFICATION O F THE ASSETS ARE NOT DONE BY THE ASSESSEE, THEN THE ASSESSEE SHALL BE LI VING IN FOOLS PARADISE WITH LOT OF ASSETS ON PAPERS BUT NOTHING ON GROUND. WE DEEM IT APPROPRIATE THAT THE SAID STATE OF AFFAIRS OF NOT M AINTAINING UP TO DATE ITA 283/JP/2009 WITH OTHER CASES_ AJMER VVNL VS ACIT 23 FIXED ASSETS REGISTER OF THE ASSESSEE, BE BROUGHT T O THE NOTICE OF THE CMD OF THE ASSESSEE. WE EXPECT THAT THE LD CMD OF T HE ASSESSEE SHALL MAKE AN ENDEAVOUR TO ENSURE THE MAINTENANCE OF FIXE D ASSETS REGISTER WITHIN A PERIOD OF 365 DAYS FROM THE DATE OF RECEIPT OF THIS ORDER, FAILING WHICH HE SHALL BE PERSONALLY LIABLE. A COPY OF THIS ORDER BE SENT TO THE CMD/CHIEF EXECUTIVE OFFICER OF THE ASSESSEE FOR THE PURPOSES OF INFORMATION AND COMPLIANCE. 10. THE 3 RD GROUND/ISSUE OF THE ASSESSEES APPEAL FOR THE ASSE SSMENT YEAR 2003-04 IS AGAINST DISALLOWANCE OF DEPRECIATION OF RS. 17,75,49,581/- U/S 43(1) EXPLANATION 10 OF THE INCO ME TAX ACT, 1961 (IN SHORT THE ACT). THE LD ASSESSING OFFICER IN HIS ORDE R DATED 23/12/2008 HAS HELD AS UNDER:- IT IS WORTHWHILE TO MENTION HERE THAT SUCH TYPE OF DISALLOWANCES WAS MADE BY THE ACIT, CIRCLE-1, JODHPUR IN THE CASE OF JODHPUR VIDYUT VITRAN NIGAM LTD., FOR THE A .Y. 2004-05 WHICH IS CONFIRMED BY THE LD. CIT(A), JODHPUR VIDE AP PEAL NO. 546/2006-07 DATED 30.03.2007. IN THIS CASE THE LD. CIT(A) HAS OBSERVED AS UNDER: IN THIS CASE OF THE ASSESSEE FOR MAKING ANY ADDITI ON IN PLANT AND MACHINERY, SOME AMOUNT HAS BEEN PAID BY CONSUME R AS CONSUMER CONTRIBUTION AND SOME AMOUNT HAS BEEN PAID BY STATE GOVT. AS SUBSIDY, AND ASSESSEE HAS BOOKED THESE ASS ETS ON ITA 283/JP/2009 WITH OTHER CASES_ AJMER VVNL VS ACIT 24 SOME FICTITIOUS COST DESCRIBED BY ASSESSEE AS STAND ARD COST WITHOUT ANY REASONABLE BASIS AND DIFFERENCE OF STAND ARD COST AND PURCHASED COST HAS BEEN CREDITED TO COST VALUAT ION RESERVES. THESE CAN BE CONVENIENTLY EXPLAINED BY WAY OF AN EXAMPLE. FOR THE SAKE OF RESUMING THE PURCHASE COST OF ASSETS AT RS. 100/-, FOR WHICH CONSUMER HAS MADE CONTRIBUT ION OF RS. 30/- AND GOVT. HAS GIVEN SUBSIDY OF RS. 10/- AND RS . 20/- TO COST VARIANCE RESERVES, THEREFORE, THE ACTUAL COST TO THE ASSESSEE COMPANY FOR THAT ASSET WOULD COME TO RS. 60 /- HOWEVER, IT WOULD NOT BE JUSTIFIED TO CLAIM DEPRECIAT ION ON THE COST OF RS. 120/-. AS PER COMPANIES ACT THIS THING CAN BE SHOWN IN THE BALANCE SHEET IN TWO WAYS- I) SUBSIDIES 10 CAPITAL ASSET 120 CONSUMERS CONTRIBUTION 30 COST VARIANCE RESERVE 20 II) CAPITAL ASSET 120 60 LESS: SUBSIDIES 10 CONSUMER CONTRIBUTION 30 COST VARIANCE RESERVE 20 IN THE PRESENT CASE IN APPEAL BEFORE ME THE APPELLA NT HAS CHARGED DEPRECIATION ON RS. 120/-. IF THE ASSESSEE HAD CHOS EN THE FIRST METHOD THEN AS PER THE COMPANIES ACT AND ACCOUNTING STANDARDS, ASSESSEE HAS EITHER TO CHARGE DEPRECIATI ON ON ACTUAL COST' I.E. RS. 60/- AS PER EXAMPLE IN P & L ACCOUNT AND EXCESS DEPRECIATION ON ACCOUNT OF THESE RESERVES AS DEFERR ED INCOME OVER THE USEFUL PERIOD OF LIFE IN SYSTEMATIC AND RA TIONAL BASIS, OR ITA 283/JP/2009 WITH OTHER CASES_ AJMER VVNL VS ACIT 25 OF AN AMOUNT EQUAL TO ADDITIONAL DEPRECIATION (EXCE SS) DUE TO CREATION OF THESE RESERVES HAS TO BE CREDITED TO P & L ACCOUNT FROM THESE RESERVES; IF THE APPELLANT HAD CHOSEN TH E SECOND METHOD, IT WAS REQUIRED TO CHANGE DEPRECIATION ON AC TUAL COST ONLY IN ALL THREE CASES, THE EFFECT OF DEPRECIATION ON GROSS AMOUNT WOULD HAVE BEEN ONLY THAT II WILL TRANSFER THE SE RESERVES TO GENERAL RESERVES, WHILE LEAVING THE PROFIT UNTOU CHED. IN THE INSTANT CASE THE ASSESSEE HAS CHARGED DEPRECIATION ON FICTITIOUS COST DIRECTLY TO P&L, NEITHER CONSIDERING THESE RES ERVES AS DEFERRED INCOME OVER THE USEFUL PERIOD OF LIFE IN S YSTEMATIC AND RATIONAL BASIS, NOR CREDITING AN EQUAL AMOUNT OF EX CESS DEPRECIATION FROM THESE RESERVES TO P&L ACCOUNT, AN D IN THIS WAY HAS REDUCED IN PROFIT TO THAT EXTENT, OR ALTERNA TIVELY HAS ACTUALLY CREDITED THE GENERAL RESERVE TO THE EXTENT OF EXCESS DEPRECIATION. AFTER CONSIDERING THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE I HEREBY RECALCULATED THE DEPRECIATION ALLOWABLE TO THE ASSESSEE COMPANY ACCORDING TO THE PROVISION OF SECTION 32(1) (III) READ WITH SECTION 43(1) EXPLANATION 10 AS UNDER:- ( I) CHART SHOWING TOTAL ASSETS AND DEPRECIATION CLAIM ED BY ASSESSEE SINCE BEGINNING. A.Y. TOTAL ASSETS BEFORE DEPRECIATION %AGE OF DEPRECIATION CLAIMED DEPRECIATION CLAIMED RESERVE AMOUNT WHICH ARE NOT DEDUCTED FROM ASSETS. 1 2 3 4 5 2001-02 6811475710 22.90 1560440583 468832700 ITA 283/JP/2009 WITH OTHER CASES_ AJMER VVNL VS ACIT 26 2002-03 6690727250 21.66 1449311462 984434741 2003-04 6682999206 22.12 1478859902 1755233190 2004-05 6620127174 22.34 1479119956 2578753533 2005-06 7780721388 21.01 1635342953 3705320416 11. BEING AGGRIEVED BY THE ORDER OF THE LD ASSESSIN G OFFICER, THE ASSESSEE CARRIED THE MATTER BEFORE THE LD CIT(A), WHO AFTER REPRODUCING THE ORDER PASSED BY THE LD ASSESSING OFFICER HAS HE LD AS UNDER:- 4.3 SINCE THE FACTS OF CASE ARE IDENTICAL, I SEE N O REASON TO COME TO A DIFFERENT CONCLUSION. THE DISALLOWANCE OF DEPRECIATION U/S 43(I) EXPLANATION 10 OF IT ACT IS T HEREFORE CONFIRMED. HOWEVER, THE FIGURE OF DISALLOWANCE SHALL BE TAKEN AT RS. 17,75,49,581/- INSTEAD OF RS. 31,61,86 ,877/- AS DISCUSSED SUBSEQUENTLY, IN RESPECT OF GROUND NO. 3. GROUND NO. 2 IS THUS PARTLY ALLOWED. 12. NOW THE ASSESSEE IS IN APPEAL BEFORE US. THE LD AR OF THE ASSESSEE HAS SUBMITTED AS UNDER:- THE A.O. HAS ALLEGED TO DISALLOW DEPRECIATION ON FIXE D ASSETS BASED ON ANNEXURE - II TO THE AUDITOR'S REPORT WHICH READ AS UNDER: - (1) CONTRIBUTIONS. GRANTS & SUBSIDIES TOWARDS COST OF CAPITAL ASSETS THE GRANTS/ CONTRIBUTION RECEIVED FROM STATE GOVT. / OTHER GOVT. DEPARTMENTS TOWARDS THE COST OF FIXES ASSETS I S ITA 283/JP/2009 WITH OTHER CASES_ AJMER VVNL VS ACIT 27 SHOWN SEPARATELY UNDER THE HEADS CONTRIBUTIONS, GRAN TS, SUBSIDIES TOWARDS COST OF CAPITAL ASSETS AND IS NEIT HER DEDUCTED FROM THE GROSS VALUE OF THE ASSETS NOR IT IS TREATED AS A DEFERRED INCOME ON THE SYSTEMATIC AND RATIONAL BASIS OVER THE USEFUL LIFE OF THE ASSET. THUS BOTH T HE FIXED ASSETS AND GRANTS ARE OVERSTATED BY THE AMOUNT OF G RANTS; THIS SHOULD HAVE BEEN TAKEN AS PER THE PROVISIONS O F AS-12. (2) IN CASE REPLACEMENT OF ASSETS. WDV OF THE ASSET DISCARDED SHOULD BE REDUCED FROM THE TOTAL FIXED ASSETS AND L OSSES ARISING FROM THE RETIREMENT OR GAINS OR LOSSES ARIS ING FROM DISPOSAL OF THE FIXED ASSETS, WHICH IS CARRIED AT CO ST SHOULD BE RECOGNIZED IN THE PROFIT & LOSS ACCOUNT. HOWEVER THIS IS NOT BEING DONE. ALSO SCRAP IS ACCOUNTED FOR AT NIL VALUE AND NET REALIZABLE VALUE WHILE AS PER THE PROVISIONS OF AS- 10 CLAUSE-24 MATERIAL ITEMS FROM ACTIVE USE AND HEL D FOR DISPOSAL SHOULD BE STATED AT THE LOWER OF THEIR NET BOOKS VALUE AND NET BOOK VALUE AND SHOWN SEPARATELY IN THE FINANCIAL STATEMENTS. THE SAME HAS NOT BEEN DONE THU S LEADING TO THE VIOLATION OF AS-10. (3) IN THE ABSENCE OF CONTRIBUTION, GRANTS, SUBSID IES TOWARDS THE COST OF CAPITAL ASSETS BEING DEDUCTED FROM THE GROSS VALUE OF ASSET AS ALSO IN CASE OF REPLACEMENT OF AS SET, WDV OF THE ASSET, WDV OF THE ASSET DISCARDED IS NOT REDUCED FROM THE GROSS VALUE OF THE ASSET, DEPRECIA TION IS CHARGED ON THE FULL GROSS VALUE OF THE ASSET. THIS I S AGAINST THE PROVISIONS OF AS-6. THUS, DEPRECIATION IS OVERST ATED ITA 283/JP/2009 WITH OTHER CASES_ AJMER VVNL VS ACIT 28 AND NET LOSS, WHICH IS SHOWN AS SUBSIDY RECEIVABLE F ROM GOVT. IS OVERSTATED BY THE AMOUNT THE QUANTIFICATIO N OF WHICH IS NOT POSSIBLE IN THE ABSENCE OF FULL DETAILS OF DISCARDED ASSETS AND THE ALLOCATION OF CONTRIBUTION & TOWARDS THE RESPECTIVE ASSET. BESIDES THE ABOVE REMARKS THE A.O. HAS RELIED ON T HE DISALLOWANCES MADE BY ACIT, CIRCLE-1, JODHPUR IN CASE OF JODHPUR VIDHYUT VITARAN NIGAM LTD. FOR A.Y. 2004-05 CONFIRMED BY LD. CIT(A), JODHPUR VIDE APPEAL NO. 546/2006-07 DATED 30.03.2007 THE OBSERVATION OF CIT (A) WAS AS UNDER: 'IN THIS CASE OF THE ASSESSEE FOR MAKING ANY ADDITI ON IN PLANT & MACHINERY, SOME AMOUNT HAS BEEN PAID BY CONSUMER AS CONSUMER CONTRIBUTION AND SOME AMOUNT HAS BEEN PAID BY STATE GOVT. AS SUBSIDY, AND ASSESSEE HAS BOOKED THE SE ASSETS ON SOME FICTITIOUS COST DESCRIBED BY ASSESSEE AS ST ANDARD COST WITHOUT ANY REASONABLE BASIS AND DIFFERENCE OF STAN DARD COST AND PURCHASED COST HAS BEEN CREDITED TO COST VALUAT ION RESERVES. THESE CAN BE CONVENIENTLY EXPLAINED BY WA Y OF AN EXAMPLE. FOR THE SAKE OF RESUMING THE PURCHASE COST OF ASSETS AT RS. 100/-, FOR WHICH CONSUMER HAS MADE CONTRIBUT ION OF RS. 30/- AND GOVT. HAS GIVEN SUBSIDY OF RS. 10/- AND RS . 20/- TO COST VARIANCE RESERVES, THEREFORE, THE ACTUAL COST TO THE JUSTIFIED TO CLAIM DEPRECIATION ON THE COST OF RS. 120/-. AS PER COMPANIES ACT THIS THING CAN BE SHOWN IN THE BALANC E SHEET IN TWO WAYS. SUBSIDIES 10 CAPITAL ASSET 120 CONSUMERS CONTRIBUTION 30 COST VARIANCE RESERVE 20 ITA 283/JP/2009 WITH OTHER CASES_ AJMER VVNL VS ACIT 29 CAPITAL ASSET 120 60 LESS: SUBSIDIES 10 CONSUMER CONTRIBUTION 30 COST VARIANCE RESERVE 20 IN THE PRESENT CASE IN APPEAL BEFORE ME THE APPELL ANT HAS CHARGED DEPRECIATION ON RS. 120/-. IF THE ASSESSEE HAD CHOSEN THE FIRST METHOD THEN AS PER THE COMPANIES A CT AND ACCOUNTING STANDARDS, ASSESSEE HAS EITHER TO CH ARGE DEPRECIATION ON 'ACTUAL COST' I.E. RS. 60/- AS PER EXAMPLE IN P & L ACCOUNT AND EXCESS DEPRECIATION ON ACCOUNT OR THESE RESERVES AS DEFERRED INCOME OVER THE USEFUL P ERIOD OF LIFE IN SYSTEMATIC AND RATIONAL BASIS, OR OF AN AMOUNT EQUAL TO ADDITIONAL DEPRECIATION (EXCESS) DUE TO CR EATION OF THESE RESERVES HAS TO BE CREDITED TO P & L ACCOUNT FROM THESE RESERVES: IF THE APPELLANT HAD CHOSEN THE SEC OND METHOD, IT WAS REQUIRED TO CHANGE DEPRECIATION ON AC TUAL COST ONLY IN ALL THREE CASES, THE EFFECT OF DEPRECI ATION ON GROSS AMOUNT WOULD HAVE BEEN ONLY THAT IT WILL TRANSF ER THESE RESERVES TO GENERAL RESERVES, WHILE LEAVING TH E PROFIT UNTOUCHED. IN THE INSTANT CASE THE ASSESSEE HAS CHA RGED DEPRECIATION ON FICTITIOUS COST DIRECTLY TO P & L, NEITHER CONSIDERING THESE RESERVES AS DEFERRED INCOME OVER THE USEFUL PERIOD OF LIFE IN SYSTEMATIC AND RATIONAL BA SES, NOR CREDITING AN EQUAL AMOUNT OF EXCESS DEPRECIATION FR OM THESE RESERVES TO P & L ACCOUNT, AND IN THIS WAY HAS REDUCES IN PROFIT TO THAT EXTENT, OR ALTERNATIVELY HAS ACTUALLY CREDITED THE GENERAL RESERVES TO THE EXTEN T OF EXCESS DEPRECIATION. ITA 283/JP/2009 WITH OTHER CASES_ AJMER VVNL VS ACIT 30 THUS BASED ON THESE NOTES TO ACCOUNTS AND THE FINDI NGS IN CASE OF JD.VVNL, JODHPUR THE A.O. HAS ALLEGED TO DI SALLOW THE CLAIM OF DEPRECIATION ON FIXED ASSETS BEING SER VICE CONNECTIONS AND LINES CONSIDERING THAT THE RESERVES CREATED OUT OF SUBSIDIES, GRANTS AND CONTRIBUTION B Y CONSUMER ARE NOT REFUNDABLE AND THUS BEING THE CAPI TAL RECEIPT SHOULD BE DEDUCTED FROM THE COST OF FIXED A SSETS FOR WHICH RECEIVED AND ONLY ON THE REMAINING BLOCK O F ASSET THE DEPRECIATION SHOULD BE ALLOWED. THE A.O. HAS ALLEGED TO DISALLOW PORTION OF DEPRECIA TION U/SEC. 32(L)(III) READ WITH SECTION 43(1) EXPLANATIO N 10 WITHOUT CONSIDERING THE FOLLOWING FACTS: - A. THAT THE COMPANY IS A 100% OWNED UNDERTAKING OF RAJASTHAN GOVERNMENT AND IS GOVERNED BY THE INSTRUCTIONS APPROVED BY GOVERNMENT FOR RAJASTHAN STATE ELECTRICITY BOARD'S THE ELECTRICITY (SUPPLY) A NNUAL ACCOUNTS RULES, 1995 AND ACCOUNTING INSTRUCTIONS. ACCORDING TO RULES PAGE NO. 252 & 253 THE TREATMENT OF CONTRIBUTION, GRANTS AND SUBSIDIES TOWARDS COST O F CAPITAL ASSETS SHALL BE CREDITED IN ACCORDANCE WITH THE POLICIES LAID DOWN IN THE FOLLOWING PARAGRAPHS. 2.34 AMOUNT RECEIVABLE AS CONSUMER'S CONTRIBUTION, SUBSIDY ARE GRANT TOWARDS CAPITAL ASSETS SHALL BE CREDITED TO APPROPRIATE ACCOUNT SET OUT IN CHART OF ACCOUNTS ONLY IF THE FOLLOWING CONDITIONS ARE SATISF IED : ITA 283/JP/2009 WITH OTHER CASES_ AJMER VVNL VS ACIT 31 (I) THE AMOUNT IS NOT SUBJECT TO ANY CONDITIONS TO B E FULFILLED BY THE BOARD. OR THE CONDITIONS ATTACHED TO THE AMOUNT HAVE BEEN FULFILLED BY THE BOARD. (II) NO PART OF THE AMOUNT IS REFUNDABLE NOR IS LIK ELY TO BECOME REFUNDABLE BY THE BOARD. 2.35 CONSUMER'S CONTRIBUTION, SUBSIDIES AND GRANTS TOWARDS COST OF CAPITAL ASSETS SHALL NOT BE TREATED AS A REDUCTION IN THE 'COST' BUT AS A CAPITAL RECEIPT TO BE CREDITED TO CAPITAL RESERVE ACCOUNT. 2.36 ACCOUNTING FOR COST OF A CAPITAL ASSET SHALL B E DONE IN THE NORMAL COURSE WITHOUT CONSIDERING ANY CONTRIBUTION, SUBSIDY ARE GRANTS TOWARDS THE COST OF THE ASSET, DEPRECIATION SHALL BE CHARGED IN THE NOR MAL COURSE ON THE 'FULL COST' OF THE ASSET. B. THAT THE RESERVES & SURPLUSES IN WHICH THESE GRAN TS, SUBSIDIES, CONTRIBUTION ARE CREDITED ARE IN FORM OF DEPOSITS FROM CUSTOMERS ARE IN ACTUAL THE LIABILITI ES AND COULD NOT BE REDUCED FROM THE COST OF ASSETS FOR TH E PURPOSE OF CALCULATION OF DEPRECIATION SINCE THEY A RE IN THE NATURE OF ' CAPITAL RECEIPT'. ITA 283/JP/2009 WITH OTHER CASES_ AJMER VVNL VS ACIT 32 C. FURTHER THESE CAPITAL RECEIPTS ARE NOT DIRECTLY REL ATABLE TO THE ASSETS ACQUIRED OUT OF WHICH THE SAME DEDUCTE D TO REDUCE THE BLOCK. FURTHER ALREADY ADHOC DISALLOWANCE OF FIXED ASSETS OUT OF FRP TRANSFERS ALREADY MADE OF 20% OF ASSETS WITHOUT ANY BREAKUP AS ABOVE AND FURTHER DISALLOWANCE OF DEPRECIATION ON THE SAME BLOCK OF ASSETS IS A 'DOUBLE DISALLOWANCE / DOUBLE ADDITION'. D. THAT THE COMPANY HAS TO FOLLOW THE INSTRUCTION OF ACCOUNTING AS APPROVED AND THE ACCOUNTS HAS BEEN PREPARED ON THE BASIS AND AS PER THE BYE LAWS THE TREATMENT OF CONSUMERS CONTRIBUTION, SUBSIDIES AND GRANTS HAS BEEN MADE IN THE BOOKS ACCORDINGLY BY CREATING THE RESERVES AND THE A.O. HAS ERRED TO REDUCE THE SAME FROM THE COST AND DISALLOW PORTION DEPRECIATION. THE COMPANY CANNOT ACT BEYOND THE ACCOUNTING NORMS APPROVED FOR THEM AND IS ALSO GOVERNED BY ACCOUNTING FOR ELECTRICITY COMPANIES AN D ACCORDINGLY THE TREATMENT HAS BEEN MADE IN BOOKS AN D THE A.O. HAS MADE DISALLOWANCE WITHOUT CONSIDERING THE ACCOUNTING APPLICABLE TO ELECTRICITY COMPANIES. E. ALTERNATIVELY THE A.O. WHILE MAKING THE DEDUCTION FROM FIXED ASSETS BLOCK FOR RESERVES & SURPLUS HAS NOT FOLLOWED CONSISTENT METHOD I.E. IN A.Y. 2001-02 AND 2002-03 HAS NOT DEDUCTED AMOUNTS FOR MATERIAL COST VARIANCE UNDER THE HEAD RESERVES & SURPLUS BUT IN T HE ITA 283/JP/2009 WITH OTHER CASES_ AJMER VVNL VS ACIT 33 LATER YEARS FOR DEDUCTION OF RESERVES & SURPLUS FRO M FIXED ASSETS THE AMOUNT OF MATERIAL COST VARIANCE H AS ALSO BEEN DEDUCTED WHICH IS NOT IN RELEVANCE WITH THE FIXED ASSETS COST AND IS RATHER RELATED TO MATERIAL COST AND THUS THE BLOCK OF ASSETS HAS REDUCED FOR DEPRECIATION BY THIS AMOUNT AND THE ELIGIBLE DEPRECIATION HAS ALSO REDUCED. FURTHER THE ADDITION TO FIXED ASSETS AS PER BOOKS HAS BEEN TAKEN BY A.O. AT OTHER ARBITRARY FIGURES WHICH HAVE ALSO BEEN CORRECT ED IN CHART. THUS AS PER THE CHART ON THE THEORY OF A.O . THE DEPRECIATION DISALLOWABLE COME TO RS. 17,75,49,581.00 FOR THE YEAR AGAINST TAKEN BY A.O. AT RS. 31,61,86,877.00 WHICH HAS BEEN CONSIDERED BY LD CIT (A) AND ADDITIONS RESTRICTED TO RS. 17,75,49,581 .00 AGAINST ORIGINAL ADDITION OF RS. 31,61,86,877.00 CO PY OF REVISED CHART FOR DISALLOWANCE OF DEPRECIATION AS PER A.O.'S THEORY ENCLOSED HEREWITH. F. FURTHER ANY LOSS/ SHORT FALL IN REVENUE IS SUBJE CT TO SUB-VENTION CHARGES AS RECEIVABLE FROM STATE GOVERNMENT SUBJECT TO VERIFICATION; HOWEVER TO CLOSE THE ACCOUNTS, THE CORPORATION TAKES 'DIFFERENCE IS REVENUE' AS 'SUBVENTION' & NULLIFIED THE LOSS. THUS IF THIS DEPRECIATION IS DISALLOWED; SUBVENTION CHARGES SHALL ALSO GOT REDUCED & ULTIMATELY THE INCOME/ LOS S WOULD BE NIL & THUS IN OTHER TERMS SUBVENTION BEING A 'PROVISIONAL INCOME' ALREADY TAKES CARE FOR SUCH ITA 283/JP/2009 WITH OTHER CASES_ AJMER VVNL VS ACIT 34 VARIATION IF ANY. (PG. 106 OF PAPER BOOK OR PG. 49 OF ANNUAL REPORT FOR THE F.Y. 2002-03). THE LD. CIT(A) WITHOUT APPRECIATING THE FACTS HAS DISALLOWED THE DEPRECATION BUT HAS GRANTED PART RELI EF FOR THE TECHNICAL ERROR. 13. AT THE OUTSET, THE LD DR HAS VEHEMENTLY SUPPORT ED THE ORDERS PASSED BY THE LOWER AUTHORITIES. 14. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. DURIN G THE COURSE OF ARGUMENT, A POINTED QUERY WAS ASKED FROM THE LD AR, TO WHICH IT WAS FAIRLY STATED THAT THE CONTRIBUTION / GRANT IN THE FORM OF SUBSIDY WERE RECEIVED FROM THE STATE GOVT./OTHER DEPARTMENT TOWAR DS THE COST OF CAPITAL ASSET AND FOR REPLACEMENT OF THE ASSETS. EX PLANATION 10 TO SECTION 43 OF THE ACT PROVIDES AS UNDER:- [EXPLANATION 10.- WHERE A PORTION OF THE COST OF A N ASSET ACQUIRED BY THE ASSESSEE HAS BEEN MET DIRECTLY OR INDIRECTLY BY THE CENTRAL GOVERNMENT OR A STATE GOVERNMENT OR ANY AUTHORITY ESTABLISHED UNDER ANY LAW OR BY ANY OTHER PERSON, IN THE FORM OF A SUBSIDY OR GRANT OR REIMBURSEMENT (BY WHATEVER NAME CALLED), THEN, SO MUCH OF THE COST AS IS RELATABLE TO SUCH SUBSIDY OR GRANT OR REIMBURSEMENT SHALL NOT BE INCLUDED IN THE ACTUAL COST OF THE ASSET TO THE ASSESSEE : PROVIDED THAT WHERE SUCH SUBSIDY OR GRANT OR REIMBURSEMENT IS OF SUCH NATURE THAT IT CANNOT BE ITA 283/JP/2009 WITH OTHER CASES_ AJMER VVNL VS ACIT 35 DIRECTLY RELATABLE TO THE ASSET ACQUIRED SO MUCH OF THE AMOUNT WHICH BEARS TO THE TOTAL SUBSIDY OR REIMBURSEMENT OR GRANT THE SAME PROPORTION AS SUCH ASSET BEARS TO ALL THE ASSETS IN RESPECT OF OR WITH REFERENCE TO WHICH THE SUBSIDY OR GRANT OR REIMBURSEMENT IS SO RECEIVED, SHALL NOT BE INCLUDED IN THE ACTUAL COST OF THE ASSET TO THE ASSESSEE.] A BARE READING OF THE EXPLANATION 10 OF SECTION 43 OF THE ACT, WHICH CLEARLY PROVIDES THAT WHERE A PORTION OF THE COST O F AN ASSET ACQUIRED BY THE ASSESSEE HAS BEEN MET DIRECTLY OR INDIRECTLY BY THE CENTRAL GOVERNMENT OR A STATE GOVERNMENT IN THE FORM OF A S UBSIDY OR GRANT OR REIMBURSEMENT, THEN, SO MUCH OF THE SUBSIDY OR GRAN T OR REIMBURSEMENT SHALL NOT BE INCLUDED IN THE ACTUAL COST OF THE ASS ET TO THE ASSESSEE. ADMITTEDLY, THE AMOUNT HAS BEEN RECEIVED BY THE ASS ESSEE IN THE FORM OF GRANT/REIMBURSEMENT/SUBSIDY FROM THE STATE GOVER NMENT THEREFORE, IN OUR VIEW, THE ORDER PASSED BY THE LD CIT(A) IS REQ UIRED TO BE UPHELD AND THE VALUE OF THE ASSETS SHALL BE TAKEN BY THE L D ASSESSING OFFICER AFTER ADJUSTING THE SUBSIDY/GRANT/REIMBURSEMENT F ROM THE STATE GOVT. OR THE OTHER GOVERNMENT DEPARTMENTS. ACCORDINGLY, T HIS ISSUE IS DECIDED AGAINST THE ASSESSEE AND IN FAVOUR OF THE REVENUE. 15. THE GROUND NO. 4 AND 5 OF THE ASSESSEES APPEAL FOR THE A.Y. 2003-04 ARE INTERLINKED AND ARE AGAINST APPLICATION OF SECTION 115JB OF ITA 283/JP/2009 WITH OTHER CASES_ AJMER VVNL VS ACIT 36 THE ACT AND ALSO CHARGING OF INTEREST U/S 234B ON M AT TAX. IN THIS REGARD, THE LD ASSESSING OFFICER HAS HELD AS UNDER: - 12. PROVISION OF SECTION 115JB(2) IS REPRODUCED HE REWITH FOR READY REFERENCE: (2) EVERY ASSESSEE, BEING A COMPANY, SHALL, FOR TH E PURPOSE OF THIS SECTION, PREPARE ITS PROFIT & LOSS ACCOUNT FOR THE RELEVANT PREVIOUS YEAR IN ACCORDANCE WITH THE PROVIS ION OF PARTS II AND III OF SCHEDULE IV TO THE COMPANIES ACT, 1956: PROVIDED THAT WHILE PREPARING THE ANNUAL ACCOUNTS INCLUDING PROFIT AND LOSS ACCOUNT,- (I) THE ACCOUNTING POLICIES; (II) THE ACCOUNTING STANDARDS ADOPTED FOR PREPARING SUCH ACCOUNTS INCLUDING PROFIT AND LOSS ACCOUNT; (III) THE METHOD AND RATES ADOPTED FOR CALCULATING THE DEPRECIATION, SHALL BE THE SAME AS HAVE BEEN ADOPTE D FOR THE PURPOSE OF PREPARING SUCH ACCOUNTS INCLUDIN G PROFIT AND LOSS ACCOUNT AND LAID BEFORE THE COMPANY AT ITS ANNUAL GENERAL MEETING IN ACCORDANCE WITH THE PROVISIONS OF SECTION 210 OF THE COMPANIES ACT, 195 6. ACCORDING TO THE ABOVE PROVISION, THE ASSESSEE COM PANY HAS TO FOLLOW ACCOUNTING POLICIES AND PREPARE ITS PR OFIT & LOSS ACCOUNT FOR THE RELEVANT PREVIOUS YEAR IN ITA 283/JP/2009 WITH OTHER CASES_ AJMER VVNL VS ACIT 37 ACCORDANCE WITH THE PROVISIONS OF PARTS II & III OF SCHEDULE-VI OF THE COMPANY ACT, 1956, HOWEVER THE ASSESSEE HAS NOT FOLLOWED THE ACCOUNTING STANDARD AS - 12 , AS-6, AS-2, AS-1 AND VARIOUS DEFECTS HAVE BEEN ALSO NOTICED BY THE STATUTORY AUDITOR SHRI S.K. BAK LIWAL VIDE HIS REPORT DATED 29.07.2006. IN SUCH CIRCUMSTA NCES THE BOOK PROFIT HAS TO BE CALCULATED IN ACCORDANCE WITH ACCOUNTING STANDARD. IN VIEW OF THE ABOVE THE ASSES SEE WAS ASKED DURING THE ASSESSMENT PROCEEDINGS FOR THE A.Y. 2005-06; TO CALCULATE THE DEPRECIATION FOR ALL YEAR STARTING FROM A.Y. 2001-02 BY CONSIDERING THIS ACCOUNTING STANDARD I.E. REDUCING THE INCREASE IN CONSUMER CONTRIBUTION TOWARDS SERVICE CONNECTION AND LINE, SUBSIDIES AND GRANTS TOWARDS COST OF CAPITAL ASSETS, COST VARIANCE RESERVE ETC. FROM THE VALUE O F FIXED ASSETS. VIDE REPLY DATED 27.12.2007 AND 28.12.2007 ASSESSEE HAS SHOWN HIS INABILITY TO SUBMI T THE SAME IN SUCH A SHORT PERIOD. DURING THE A.Y. 20 06- 07 THE ASSESSEE HAS NOT SUBMITTED ANY CALCULATION A ND ENCLOSED PHOTOCOPY OF THE CALCULATION MADE BY THE A .O. AS IN THE A.Y. 2005-06. 16. BEING AGGRIEVED BY THE ORDER OF THE LD ASSESSIN G OFFICER, THE ASSESSEE CARRIED THE MATTER BEFORE THE LD CIT(A), WHO HAD PARTLY ALLOWED THE APPEAL AFTER DISCUSSING THE PROVISIONS BY OBSER VING AS UNDER:- ITA 283/JP/2009 WITH OTHER CASES_ AJMER VVNL VS ACIT 38 5.6 THE APPELLANT FURNISHED COMPLETE CHART REGARDIN G CALCULATION OF DEPRECIATION FOR THE PERIOD A.Y. 200 1-02 TO A.Y. 2006-07. THE A.O. WAS ALSO ASKED TO VERIFY THES E FIGURES FROM RECORDS. AS A RESULT OF THIS VERIFICAT ION, IT WAS FOUND THAT DEPRECIATION DISALLOWED U/S 43(I) FOR BLO CK OF ASSETS SHOULD BE RS. 17,75,49,581/- INSTEAD OF RS. 31,61,86,877/-. THE A.O. IS DIRECTED TO TAKE THIS FI GURE FOR THE PURPOSE OF CALCULATION OF BOOK PROFITS U/S 115J B. THERE WILL BE NO CHANGE IN THE OTHER FIGURE OF RS. 16,20,2 0,005/- ON ACCOUNT OF DEPRECIATION ON NON-EXISTENT ASSETS. GROUND NO. 3 IS THUS PARTLY ALLOWED. 17. NOW THE ASSESSEE IS IN APPEAL BEFORE US. THE LD A R OF THE ASSESSEE HAS SUBMITTED AS UNDER:- THE A.O. HAS ALLEGED TO CONSIDER ALL THE DISALLOWANCE S AS MADE ABOVE FOR ADJUSTMENTS TO BOOK PROFIT CONSIDERI NG THAT THE ANNUAL ACCOUNTS AS PREPARED ARE NOT PROPER AS P ER THE COMPANIES ACT AND EXCESSIVE DEPRECIATION CLAIMED IN BOOKS THE BOOK PROFIT CAN BE RECOMPUTED BY A.O WHICH HAVE BEEN CONFIRMED BY LD CIT (A) CONSIDERING THAT THE BOOKS ARE ITSELF CONSIDERED NOT PROPER AS PER COMPANIES ACT AS POINT ED BY STATUTORY AUDITORS AND HENCE THE ADJUSTMENT MADE TO BOOK PROFIT BY AO ARE VALID. WHEREAS THE FACTS AND THE LEGAL ASPECT IN VIEW OF AM ENDED ACT ARE AS UNDER; - ITA 283/JP/2009 WITH OTHER CASES_ AJMER VVNL VS ACIT 39 THAT THE ASSESSEE IS A RAJASTHAN STATE GOVERNMENT CO MPANY ENGAGED IN THE BUSINESS OF POWER DISTRIBUTION IN THE STATE OF RAJASTHAN. THE ERSTWHILE RAJASTHAN STATE ELECTRICITY BOARD (RSEB) WAS SPLIT INTO THREE COMPANIES NAMELY. ELECTR ICITY GENERATING COMPANY, TRANSMISSION COMPANY AND DISTRIB UTION COMPANIES AS PER THE RAJASTHAN POWER STATE REFORMS A CT, 1999. OUT OF THREE DISTRIBUTION COMPANIES THE APPLICANT I S ONE SAID TO BE THE SUCCESSOR OF THE ERSTWHILE RAJASTHAN STATE ELECTRICITY BOARD. THOUGH THE BOOK PROFIT IS 'NIL' EVEN THE A.O. HAS IN VOKED SECTION 115JB OF THE ACT ON THE PREMISE THAT THERE WAS BOOK PROFIT AND MADE ASSESSMENT ON NOTIONAL INCOME UNDER THAT SECTION BY DISALLOWING EXCESS DEPRECIATION CLAIMED A ND HAS MADE HIS OWN CALCULATION ON THE GROUND THAT ACCOUNTI NG STANDARD NO. 12, AS - 6, AS-2, AS-1 WHICH WERE REQUIR ED TO BE FOLLOWED AS PER THE COMPANIES ACT HAS NOT BEEN FO LLOWED, AS SEEN FROM THE AUDITOR'S NOTE. THE BOOK PROFIT IS NIL, SINCE ALL HUGE LOSSES AS INCURRED SHOWN RECOVERABLE FROM R AJASTHAN STATE GOVERNMENT AS SUBVENTION; SINCE FORMED ON 'NO PROFIT NO LOSS BASIS AND AS PER ELECTRICITY BOARD A CT. THE PROVISION OF MAT U/SEC. 115JB ARE AS UNDER: - (1) NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHER PROVISION OF THIS ACT, WHERE IN THE CASE OF AN ASSES SEE, BEING A COMPANY, THE INCOME-TAX, PAYABLE ON THE TOT AL ITA 283/JP/2009 WITH OTHER CASES_ AJMER VVNL VS ACIT 40 INCOME AS COMPUTED UNDER THIS ACT IN RESPECT OF ANY PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR COMMENCING ON OR AFTER THE 1ST DAY OF APRIL, [2012] , IS LESS THAN [EIGHTEEN AND ONE-HALF PER CENT] OF ITS B OOK PROFIT, [SUCH BOOK PROFIT SHALL BE DEEMED TO BE THE TOTAL INCOME OF THE ASSESSEE AND THE TAX PAYABLE BY THE ASSESSEE ON SUCH TOTAL INCOME SHALL BE THE AMOUNT O F INCOME-TAX AT THE RATE OF [EIGHTEEN AND ONE-HALF PE R CENT], (2) EVERY ASSESSEE (A) BEING A COMPANY, OTHER THAN A COMPANY REFERRED TO IN CLAUSE (B) SHALL, FOR THE PURPOSES OF THIS SECTION, PREPA RE ITS PROFIT AND LOSS ACCOUNT FOR THE RELEVANT PREVIOUS YEAR IN ACCORDANCE WITH THE PROVISIONS OF PART II O F SCHEDULE VI TO THE COMPANIES ACT, 1956 (1 OF 1956) OR (C) BEING A COMPANY, TO WHICH THE PROVISO TO SUB- SECTION (2) OF SECTION 211 OF THE COMPANIES ACT, 1956 (1 OF 1956) IS APPLICABLE, SHALL, FOR THE PURPOSES OF THIS SECTION, PREPARE ITS PROFIT AND LO SS ACCOUNT FOR THE RELEVANT PREVIOUS YEAR IN ACCORDANCE WITH THE PROVISIONS OF THE ACT GOVERNING SUCH COMPANY:] ITA 283/JP/2009 WITH OTHER CASES_ AJMER VVNL VS ACIT 41 PROVIDED THAT WHILE PREPARING THE ANNUAL ACCOUNTS INCLUDING PROFIT AND LOSS ACCOUNT, (I) THE ACCOUNTING POLICIES; (II) THE ACCOUNTING STANDARDS ADOPTED FOR PREPARING SUCH ACCOUNTS INCLUDING PROFIT AND LOSS ACCOUNT; (III) THE METHOD AND RATES ADOPTED FOR CALCULATING THE DEPRECIATION, SHALL BE THE SAME AS HAVE BEEN ADOPTED FOR THE PUR POSE OF PREPARING SUCH ACCOUNTS INCLUDING PROFIT AND LOS S ACCOUNT AND LAID BEFORE THE COMPANY AT ITS ANNUAL GENERAL MEETING IN ACCORDANCE WITH THE PROVISIONS OF SECTION 210 OF THE COMPANIES ACT, 1956 (1 OF 1956): PROVIDED FURTHER THAT WHERE THE COMPANY HAS ADOPTED OR ADOPTS THE FINANCIAL YEAR UNDER THE COMPANIES ACT, 1956 (1 OF 1956), WHICH IS DIFFERENT FROM THE PREVIOUS YEAR UNDER THIS ACT, (I) THE ACCOUNTING POLICIES; (II) THE ACCOUNTING STANDARDS ADOPTED FOR PREPARING SUCH ACCOUNTS INCLUDING PROFIT AND LOSS ACCOUNT; (III) THE METHOD AND RATES ADOPTED FOR CALCULATING T HE DEPRECIATION, ITA 283/JP/2009 WITH OTHER CASES_ AJMER VVNL VS ACIT 42 SHALL CORRESPOND TO THE ACCOUNTING POLICIES, ACCOU NTING STANDARDS AND THE METHOD AND RATES FOR CALCULATING THE DEPRECIATION WHICH HAVE BEEN ADOPTED FOR PREPARING SUCH ACCOUNTS INCLUDING PROFIT AND LOSS ACCOUNT FOR SUCH FINANCIAL YEAR OR PART OF SUCH FINANCIAL YEAR FALLI NG WITHIN THE RELEVANT PREVIOUS YEAR. BOOK PROFIT (115JA/115JB) - NET PROFIT AS PER PROFIT AND LOSS ACCOUNT (AFTER 13 ADJUSTMENTS) IS BOOK PROFIT. THIRTEEN ADJUSTMENTS TO NET PROFIT TO CONVERT IT INTO BOOK PROFIT - NET PROFIT AS SHOWN IN PROFIT AND LOSS ACCOUNT SHALL BE ADJUSTED AS FOLLOWS - POSITIVE ADJUSTEMENTS - NET PROFIT AS SHOWN IN PROFIT AND LOSS ACCOUNT (PREPARED IN ACCORDANCE WITH THE PROVISIONS OF PARTS II AND III OF THE SIXTH SCHEDUL E TO THE COMPANIES ACT) IS TO BE INCREASED BY FOLLOWING AMOUNTS IF DEBITED TO THE PROFIT AND LOSS ACCOUNT: A. THE AMOUNT OF INCOME TAX PAID OR PAYABLE AND THE PROVISION THEREFORE; OR B. THE AMOUNT CARRIED TO ANY RESERVES, BY WHATEVER NAME CALLED; OR C. THE AMOUNT OR AMOUNTS SET ASIDE TO PROVISIONS MADE FOR MEETING LIABILITIES, OTHER THAN ASCERTAINE D LIABILITIES; OR ITA 283/JP/2009 WITH OTHER CASES_ AJMER VVNL VS ACIT 43 D. THE AMOUNT BY WAY OF PROVISION FOR LOSSES OF SUBSIDIARY COMPANIES; OR E. THE AMOUNT OR AMOUNTS OF DIVIDENDS PAID OR PROPOSED; OR F. THE AMOUNT OR AMOUNTS OR EXPENDITURE RELATABLE TO ANY INCOME TO WHICH SECTION 10 [NOT BEING INCOME UNDER SECTION 10(23G) FOR THE ASSESSMENT YEARS 2005-06 AND 2006-07 AND NOT BEING INCOME UNDER SECTION 10(38) FROM THE ASSESSMENT YEAR 2007-08] OR 10A OR 10B OR 11 OR 12 APPLY; OR G. FROM THE ASSESSMENT YEAR 2007-08), THE AMOUNT OR DEPRECIATION. NEGATIVE ADJUSTMENTS - NET PROFIT AS SHOWN IN THE PROFI T AND LOSS ACCOUNT (PREPARED IN ACCORDANCE WITH THE PR OVISIONS OF PARTS II AND III OF THE SIXTH SCHEDULE TO THE CO MPANIES ACT) IS TO BE REDUCED BY THE FOLLOWING AMOUNTS: A. THE AMOUNT WITHDRAWN FROM RESERVES OR PROVISIONS, IF ANY SUCH AMOUNT IS CREDITED TO THE PROFIT AND LOSS ACCO UNT; OR B. THE AMOUNT OF INCOME TO WHICH ANY OF THE PROVIS IONS OF SECTION 10[NOT BEING INCOME UNDER SECTION 10(23G) F OR ASSESSMENT YEAR 2005-06 AND 2006-07 AND NOT BEING LONG TERM CAPITAL GAIN UNDER SECTION 10(38) (FROM T HE ASSESSMENT YEAR 2007-08 ONWARDS], 10A OR 10B OR 11 O R ITA 283/JP/2009 WITH OTHER CASES_ AJMER VVNL VS ACIT 44 12 APPLY, IF ANY SUCH AMOUNT IS CREDITED TO THE PRO FIT AND LOSS ACCOUNT; OR C. DEPRECIATION DEBITED TO P & L A/C (EXCEPT DEPREC IATION ON REVALUATION OF ASSET) [APPLICABLE FROM THE ASSESSME NT YEAR 2007-081: OR D. THE AMOUNT WITHDRAWN FROM REVALUATION RESERVE CRE DITED TO P & L A/C TO THE EXTENT IT DOES NOT EXCEED THE A MOUNT OF DEPRECIATION ON ACCOUNT OF REVALUATION OF ASSETS [APPLICABLE FROM THE ASSESSMENT YEAR 2007-08]. E. THE AMOUNT OF LOSS BROUGHT FORWARD OR UNABSORBED DEPRECIATION, WHICHEVER IS LESS, AS PER BOOKS OF ACC OUNT ['LOSS' FOR THIS PURPOSE DOES NOT INCLUDE DEPRECATI ON AND, THEREFORE IN A CASE WHERE AN ASSESSEE HAS SHOWN PRO FIT IN A YEAR, BUT AFTER ADJUSTMENT OF DEPRECIATION, IT RE SULTS IN LOSS, NO ADJUSTMENTS IN BOOK PROFIT IS ALLOWED]; OR F. THE AMOUNT OR PROFIT ELIGIBLE FOR DEDUCTION UNDE R SECTION 80HHC; OR G. THE AMOUNT OR PROFIT ELIGIBLE FOR DEDUCTION UNDE R SECTION 80HHE; OR H. THE AMOUNT OR PROFIT ELIGIBLE FOR DEDUCTION UNDE R SECTION 80HHF; OR I. THE AMOUNT OR PROFITS OF SICK INDUSTRIAL COMPANY FOR THE ASSESSMENT YEAR COMMENCING FROM THE ASSESSMENT YEAR ITA 283/JP/2009 WITH OTHER CASES_ AJMER VVNL VS ACIT 45 RELEVANT TO THE PREVIOUS YEAR IN WHICH THE SAID COMP ANY HAS BECOME A SICK INDUSTRIAL COMPANY UNDER SECTION 17(1) OF THE SICK INDUSTRIAL COMPANIES (SPECIAL PROVISION S) ACT, 1985 AND ENDING WITH THE ASSESSMENT YEAR DURING WHICH THE ENTIRE NET WORTH [I.E., PAID-UP CAPITAL PLUS FREE RESERVES) OF SUCH COMPANY BECOMES EQUAL TO OR EXCEE DS THE ACCUMULATED LOSSES ['FREE RESERVE' FOR THIS PUR POSE MEANS ALL RESERVES CREATED OUT OF THE PROFITS AND S HARE PREMIUM ACCOUNT BUT DOES NOT INCLUDE RESERVES CREDI TED OUT OR RE- EVALUATION OF ASSETS, WRITE BACK OF DEPRE CIATION PROVISIONS AND AMALGAMATION]. FURTHER EXPLANATION 3 (INSERTED BY THE FINANCE ACT' 2012 W.E.F. 01.04.2013) STATES THAT - INSERTED BY THE FINANCE ACT, 2012, W.E.F. 1-4-2013 [FOR THE REMOVAL OF DOUBTS, IT IS HEREBY CLARIFIED THAT FOR THE PURPOSES OF THIS SECTION, TH E ASSESSEE, BEING A COMPANY TO WHICH THE PROVISO TO SUB-SECTION (2) OF SECTION 211 OF THE COMPANIES ACT, 1956 (1 OF 1956) IS APPLICABLE, HAS, FOR AN ASSESSMENT YEAR COMMENCING ON OR BEFORE THE 1ST DAY OF APRIL, 2012, AN OPTION TO PRE PARE ITS PROFIT AND LOSS ACCOUNT FOR THE RELEVANT PREVIOUS Y EAR EITHER IN ACCORDANCE WITH THE PROVISIONS OF PART II AND PART I II OF SCHEDULE VI TO THE COMPANIES ACT, 1956 OR IN ACCORD ANCE WITH THE PROVISIONS OF THE ACT GOVERNING SUCH COMPAN Y]. (1) THUS THE A.O. IS BOUND TO MAKE ADJUSTMENTS TO TH E BOOK PROFIT ONLY FOR THIS SPECIFIED LIST OF 13TH ADJUSTMENTS AND CANNOT GO BEYOND IT. REFER THE CASE OF ITA 283/JP/2009 WITH OTHER CASES_ AJMER VVNL VS ACIT 46 APOLLO TYRES LTD. V/S CIT (2002) 255 ITR 273 HELD THAT THE A.O. WHILE COMPUTING THE BOOK PROFIT HAS O NLY THE POWER OF EXAMINING WHETHER THE BOOKS OF ACCOUNTS ARE CERTIFIED BY THE AUTHORITIES UNDER THE COMPANIE S ACT AS HAVING BEING PROPERLY MAINTAIN IN ACCORDANCE WITH THE COMPANIES ACT AND THAT HE DOES NOT HAVE THE JURISDICTION TO GO BEHIND THE NET PROFIT SHOWN IN PR OFIT & LOSS A/C EXCEPT TO THE EXTENT PROVIDED IN ADJUSTMENTS ABOVE. REFER CASE OF INDIAN OILTANKING LTD. V/S ITO (2009) AS REPORTED IN 308 ITR 217 (MUMBAI) HELD THAT IF THE ASSESSEE FOLLOWS MANDATE REGARDING ACCOUNTING POLICIES AND STANDARDS OF ICAI AND COMPANIES ACT TH E CLAIMED EXPENSES ARE NOT DISALLOWABLE AND ADDABLE TO BOOK PROFIT. (2) THUS THE ASSESSEE HAS COMPLIED WITH THE ACCOUNTI NG STANDARD AS APPLICABLE TO IT AS PER THE RSEB ANNUAL ACCOUNTS GUIDELINES AND THE PROFIT & LOSS ACCOUNTS HAS BEEN PREPARED AS PER SCHEDULE VI OF THE COMPANIES ACT AND THERE IS NO DEFECT IN THE BOOKS WHICH ARE PROPERLY AUDITED THE BOOK RESULTS CANNOT BE DISTURB ED. THE AUDITOR HAS FURTHER COMMENTED VIDE PARA IN AUDIT REPORT THAT 'AS PER COMPANY IS GOVERNED BY THE ELECTRICITY SUPPLY ACT. 1948, THE PROVISION OF THAT ACT HAVE PREVAIL WHEREVER THE PROVISIONS OF COMPANIES AC T. 1956 ARE IN CONSISTENT WITH THE SAID ELECTRICITY SUP PLY ITA 283/JP/2009 WITH OTHER CASES_ AJMER VVNL VS ACIT 47 ACT. (PG. 77 OF PAPER BOOK OR PG 20 OF ANNUAL ACCOU NTS FOR THE F.Y. 2002-03). THUS WHEN THE APPLICANT HAS BEEN MAINTAINING ITS ACCOUNTS AS PER THE PROVISIONS OF ELECTRICITY SUPPL Y ACT READ WITH ELECTRICITY (SUPPLY) ANNUAL ACCOUNTS RULES 1985 AND THE PROVISIONS OF THE COMPANIES ACT TO THE EXTENT NOT INCONSISTENT WITH THE RULES UNDER ELECTRI CITY ACT. [ELECTRICITY SUPPLY ACT SINCE HAS BEEN REPEALED BY THE ELECTRICITY SUPPLY ACT, 2003 STILL OLD RULES AS PER SECTION 185(2)(D) OF THE ACT OF 2003, ALL RULED MADE UNDER SUB SECTION (1) OF EARLIER ACT OF 1948 SHALL CONTINUE U NTIL MODIFIED). (3) FURTHER THE ADJUSTMENTS REGARDING CALCULATION OF DEPRECIATION TO CHANGE BOOK PROFIT BY A.O. IS ONLY LIMITED TO THE METHOD AND RATES ADOPTED FOR CALCULA TING THE DEPRECIATION AND THE SAME IS NOT APPLICABLE ON THE VALUE OF FIXED ASSETS AS PER BOOKS. THE A.O. HAS REL IED ON CERTAIN REMARKS OF STATUTORY AUDITORS REGARDING ACCOUNTING STANDARDS AND PHYSICAL VERIFICATION OF F IXED ASSETS BY HIM FOR CHANGING THE BOOK PROFIT FOR CALCULATION OF MAT WHEREAS THE AUDITOR HAS NO COMMENTED OR DISALLOWED ANY OF THESE ASSETS HE HAS JUST GIVEN HIS OPINION. ITA 283/JP/2009 WITH OTHER CASES_ AJMER VVNL VS ACIT 48 (4) FURTHER THE ASSESSEE IS A STATE GOVERNMENT OWNED COMPANY AND AS PER THE GOVERNMENT COMMITMENT THE LOSS OF THE COMPANY AT THE YEAR END IS TO BE BORNE BY THE STATE GOVERNMENT ONLY AND AS PER THE APPROVED ACCOUNTING NORMS THE SHARE OF LOSS IS TREATED AS INCOME FROM GOVERNMENT UNDER THE INCOME HEAD AND THE NET OUTCOME OF PROFIT & LOSS IS ALWAYS NIL. THUS AS PER THESE ACCOUNTING NORMS THE COMPANY ON ITS OWN AS PER BOOKS NEVER SUFFERS LOSS OR EARNS PROFIT AND THE BOOK PROFIT IS ALWAYS NIL. EVEN IF THESE ADJUSTMENT CONSIDERED CORRECT FOR CALCULATING BOOK PROFIT THE FACT THAT ITS IMPACT ON LOSS SHARED BY GOVERNMENT AS SHO WN INCOME INFORM OF GRANTS SHOULD ALSO BE REDUCED SINC E THE CHANGE IN FIGURES AT ONE PLACE WILL CHANGE ITS IMPACT AT OTHER PLACE IN BOOKS ALSO AND THE NET RES ULT AS PER ANNUAL ACCOUNTS REVISED WOULD BE AGAIN NIL BO OK PROFIT. THUS IT IS REQUESTED THAT THE PROVISIONS OF SECTION 115JB IN VIEW OF AFORESAID LEGAL ASPECTS CAN NOT BE APPLIED. 18. THE LD DR HAS VEHEMENTLY RELIED ON THE ORDERS PA SSED BY THE LOWER AUTHORITIES. 19. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. WE HA VE ALSO GONE THROUGH THE CONTENTION RAISED BY THE ASSESSEE AS WELL AS THE ORDER PASSED BY THE ITA 283/JP/2009 WITH OTHER CASES_ AJMER VVNL VS ACIT 49 ADVANCE RULINGS (INCOME TAX), NEW DELHI. ADVANCE RULI NGS (INCOME TAX), NEW DELHI EVEN IN THE MATTER OF JODHPUR VIDYUT VITRAN NIGAM LIMITED, WHICH IS SITUATED ON THE SAME PEDESTAL AS T HAT OF THE ASSESSEE, HAVE BEEN ACCEPTED BY THE REVENUE AND THE REVENUE H AS NOT INSISTED FOR APPLICATION OF PROVISIONS OF MAT U/S 115JB OF THE AC T. THEREFORE RESPECTFULLY FOLLOWING THE ORDER PASSED BY THE ADVAN CE RULINGS (INCOME TAX), NEW DELHI AND APPLYING THE SAME TO THE PRESENT FACTS AND CIRCUMSTANCE OF THE CASE, WE DECIDE THE ISSUES IN FA VOUR OF THE ASSESSEE. WE ALSO HELD THAT THE BENEFIT AS HAS BEEN GIVEN TO JODHPUR VIDYUT VITRAN NIGAM LIMITED UNDER THE PROVISIONS OF THE ELECTRICI TY ACT AND THE COMPANIES ACT BE ALSO EXTEND IT TO THE ASSESSEE WITH OUT INSISTING FOR THE APPLICATION OF SECTION 115JB OF THE ACT IN THE LIGH T OF THE ABOVE, THE ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE AND AGAI NST THE REVENUE. ACCORDINGLY, THIS GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED. ITA NO. 549/JP/2009 20. GROUND NO. 1 OF THE REVENUES APPEAL ITA NO. 5 49/JP/2009 FOR THE A.Y. 2006-07 IS AGAINST DELETING THE DISALLOWANC E OF RS. 9,32,66,120/- ON ACCOUNT OF PRIOR PERIOD EXPENSES. ON THIS GROUND, THE LD CIT(A) HAD ALLOWED THE APPEAL OF THE ASSESSEE BY O BSERVING AS UNDER:- ITA 283/JP/2009 WITH OTHER CASES_ AJMER VVNL VS ACIT 50 3.3 FROM THE PERUSAL OF ASSESSMENT ORDER, IT IS FO UND THAT THE ISSUE REGARDING PRIOR PERIOD EXPENSES HAS BEEN DECIDED IN FAVOUR OF THE APPELLANT BY HONBLE ITAT JAIPUR BENCH FOR A.Y 2002-03 AND 2003-04. IN ITS OR DER DATED 17.10.2008 IN CASE OF APPELLANT, IN ITA NO. 1019/JP/2007 HONBLE ITAT MADE THE FOLLOWING OBSERVATION:- THE ID CIT(A) WHILE DECIDING THE ISSUE HAS FOLLOWE D THE DECISION OF JAIPUR BENCH OF THE TRIBUNAL ON THE ISS UE IN THE CASE OF DCIT V/S CHAMBAL FERTILIZERS AND CHEMIC ALS LTD., 34 TW 59 (JPR.) HOLDING THAT THE DEDUCTION OF AN EXPENDITURE WILL BE ADMISSIBLE ONLY IN THE YEAR IN WHICH IT CRYSTALLIZED AND ACCOUNTED FOR ON THE BASIS OF SYST EM OF ACCOUNTING REGULARLY FOLLOWED BY THE ASSESSEE. AN IDENTICAL ISSUE IN THE CASE OF ASSESSEE FOR THE A. Y 2002- 03 HAS ALSO BEEN DECIDED BY JAIPUR BENCH OF THE TRIBUNAL IN FAVOUR OF THE ASSESSEE VIDE ITS ORDER D ATED 31.10.2007 IN ITA NO. 272/JP/2006. UNDER THESE CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE ID CIT(A ) WAS JUSTIFIED IN ACCEPTING THE CASE OF THE ASSESSEE ON THE ISSUE WITH THIS OBSERVATION THAT THE ASSESSEE COMPANY HAVE BEEN FOLLOWING A PARTICULAR SYSTEM OF ACCOUNTING WHERE PRIOR PERIOD INCOME AND EXPENDITUR E ARE CLAIMED ONLY WHEN THE SAME GETS CRYSTALLIZED. T HE COMPANY HAS FOLLOWED THE SYSTEM UNDER THE PECULIAR CIRCUMSTANCES OF THE CASE WHEN THE COMPANY CAME INT O EXISTENCE AFTER RESTRUCTURING OF THE PARENT COMPANY I.E. RSEB. THE FIRST APPELLATE ORDER BEING REASONED ONE I S THUS UPHELD. SO FAR AS ADDITION OF RS. 66,87,891/- ON ACCOUNT O F ADJUSTMENT OF ALLOCATION ERRORS IS CONCERNED, IT WA S EXPLAINED BY THE ASSESSEE THAT THE SAME IS ON ACCOU NT OF AN ADJUSTMENT ENTRY WHICH AROSE ON ACCOUNT OF CHANG E IN COMPOSITION OF SLR BONDS (SHORT LENDING RATE BON DS) ITA 283/JP/2009 WITH OTHER CASES_ AJMER VVNL VS ACIT 51 THROUGH WHICH THE COMPANY MEETS ITS WORKING CAPITAL AND OTHER FINANCIAL REQUIREMENTS. IT WAS SUBMITTED THAT THERE WERE NUMBER OF TERMS AND CONDITIONS ACCORDING TO WHICH THE LENDING RATES VARIES AND DURING THE YEAR DUE TO THIS VARIATION, ADDITIONAL INCOME OF RS. 66,87,8 91/- WAS FINALIZED AND THE SAME WAS INCLUDED IN THE TOTAL INCOME. THE SAME WAS IN THE NATURE OF EXTRAORDINARY ITEMS. THE AO ON THE OTHER HAND TREATED THE SAME AS EXPENDITURE AND AGAIN MADE ADDITION OF THE SAME AMOUNT RESULTING IN TO DOUBLE ADDITION. AFLER VERIF ICATION OF RECORDS, THE ID CTT(A) OBSERVED THAT THE SUM OF RS.66,87,891/- UNDER THE HEAD ADJUSTMENT OF ALLOCA TION ERROR' WAS IN THE NATURE OF INCOME AND THE SAME WAS OFFERED AS SUCH BY THE ASSESSEE IN THE RETURN. HOWE VER, THE AO HAS MISTAKENLY TREATED THE SAME AS EXPENDITU RE AND DISALLOWED THE SAME, WHICH RESULTED IN DOUBLE ADDITION OF THE SAME AMOUNT. THE ID CIT(A) OBSERVED FURTHER THAT PROBABLY THIS MISTAKE HAS OCCURRED BEC AUSE IN THE IMMEDIATELY PRECEDING YEAR, ITEM UNDER THE S AME HEAD WAS IN THE NATURE OF EXPENDITURE. UNDER THESE MATERIAL FACTS AND CIRCUMSTANCES, WE ARE OF THE VIE W THAT ID CIT(A) HAS RIGHTLY DIRECTED THE AO TO DELET E THE ADDITION OF RS. 66,87,891/- WHICH HAS ALREADY BEEN INCLUDED BY THE ASSESSEE IN ITS RETURN OF INCOME. T HE FIRST APPELLATE ORDER IS THUS UPHELD. THE GROUND IS ACCORDINGLY REJECTED. RESPECTFULLY FOLLOWING ABOVE DECISION, THE AO IS DIR ECTED TO DELETE THE ADDITION OF RS.9,32,66,120/- OUT OF P RIOR PERIOD EXPENSES. FROM THE ASSESSMENT ORDER IT IS FO UND THAT THE AO ASKED THE APPELLANT TO PRODUCE VOUCHERS FOR PRIOR PERIOD EXPENSES OF RS. 1,08,84,667/-. THE APPELLANT PRODUCED VOUCHERS FOR TOTAL AMOUNT OF RS.3,76,18,547/-. THE AO THEREFORE, CONCLUDED THAT T HE REMAINING SUM OF RS.9,32,66,120/- IS NOT ALLOWABLE ITA 283/JP/2009 WITH OTHER CASES_ AJMER VVNL VS ACIT 52 WITHIN THE MEANING OF SECTION 37(1) OF THE IT ACT. T HIS ACTION OF THE AO IS NOT JUSTIFIED. THE ACCOUNTS OF T HE APPELLANT ARE AUDITED AND THERE ARE NO ADVERSE COMMENTS OF AUDITORS IN THIS REGARD. IN SUCH A SITU ATION, THE AO CANNOT CONCLUDE THAT THE SUM OF RS.9,32,66,120/- IS NOT ALLOWABLE ONLY ON THE GROUND THAT THE VOUCHERS WERE NOT PRODUCED BEFORE HIM. GROUND NO. 1 OF THE APPEAL IS THUS ALLOWED. 21. WE HAVE GONE THROUGH THE FINDINGS OF THE LD CIT( A). THE FINDING OF THE LD CIT(A) WAS BASED ON THE JUDGMENT OF THE TRI BUNAL PASSED FOR THE ASSESSMENT YEAR 2002-03 AND 2003-04 DATED 17/10 /2008. BY RESPECTFULLY FOLLOWING THE RATIO LAID DOWN IN THE EAR LIER ORDER OF THE TRIBUNAL IN THE CASE OF ASSESSEE FOR THE YEAR REFERR ED HEREINABOVE, WE DO NOT DEEM IT APPROPRIATE TO ENTERTAIN THE GROUND OF REVENUE. AS A RESULT THEREOF, GROUND NO. 1 OF THE REVENUES APPEA L FOR THE A.Y. 2006-07 IS DISMISSED. 22. NOW WE TAKE UP THE APPEALS OF THE ASSESSEE AS WELL AS THE REVENUE BEING ITA NO. 283/JP/2009, 385/JP/2009 FOR THE A.Y. 2002-03, 386/JP/2009 FOR THE A.Y. 2003-04, ITA NO. 390/JP/20 09 AND GROUND NO. 2 OF THE ITA NO. 549/JP/2009 FOR THE A.Y. 2006-07. SINCE THE ISSUES INVOLVED IN ALL THESE APPEALS HAVE BEEN DEALT IN IT A NO. 284/JP/2009 FOR THE A.Y. 2003-04 AND THERE IS NO CHANGE EXCEPT THE FIGURES, WE DECIDE ITA 283/JP/2009 WITH OTHER CASES_ AJMER VVNL VS ACIT 53 THESE APPEALS ON THE BASIS OF THE DECISION ARRIVED AT IN ITA NO. 284/JP/2009 FOR THE A.Y. 2003-04. THEREFORE, ALL THE APPEALS OF THE ASSESSEE ARE PARTLY ALLOWED AND THE ALL THE REVENUE S APPEALS ARE DISMISSED. 23. IN THE RESULT ALL THE APPEALS OF THE ASSESSEE F OR ALL THE ASSESSMENT YEARS ARE PARTLY ALLOWED AND THE ALL THE REVENUES A PPEALS FOR ALL THE ASSESSMENT YEARS ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 14/07/2016 SD/- SD/- HKKXPAN YFYR DQEKJ (BHAGCHAND) (LALIET KUMAR) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 14 TH JULY, 2016 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- M/S AJMER VIDYUT VITRAN NIGAM LTD., AJMER. 2. IZR;FKHZ @ THE RESPONDENT- THE ACIT/DCIT, CIRCLE-2, AJMER. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 283, 385, 284, 386, 390 & 549/JP/2009) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR