DCIT, New Delhi V. M/s Givo Ltd., Delhi

ITA 2887/DEL/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 97750 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 5 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-11-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 05-11-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 09-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T VASANTHAN
• Assessee Lawyers: SANJEEV BINDAL CAS
• Keywords: Depreciation
• Section: 143(3); 37(1); 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : C : NEW DELHI BEFORE SHRI N.K. SAINI, AM AND SMT. BEENA A. PILLAI , JM ITA NO.2887/DEL/2013 ASSESSMENT YEAR : 2006-07 DCIT, CIRCLE 12(1), NEW DELHI. VS. GIVO LTD., C/O VINOD KUMAR BINDAL & CO., SHIV SUSHIL BHAWAN, D-219, VIVEK VIHAR-I, DELHI. PAN: AAACG3928L (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI VINOD BINDAL & SHRI SANJEEV BINDAL, CAS DEPARTMENT BY : SHRI T. VASANTHAN, SR. DR DATE OF HEARING : 05.11.2015 DATE OF PRONOUNCEMENT : 06.11.2015 ORDER PER BEENA A. PILLAI, JM: THIS APPEAL HAS BEEN FILED BY THE REVENUE, ARISING FROM THE ORDER DATED 15.02.2013 PASSED BY THE LD.CIT(A)-VIII, NEW DELHI FOR THE ASSESSMENT YEAR 2006-07, ON THE FOLLOWING GROUNDS:- ITA NO.2887/DEL/2013 2 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LD.CIT(A) HAS ERRED IN DELETING DISALLOWANCE OF LOS S OF FOREIGN EXCHANGE FLUCTUATION LOSS OF RS.28,45,070/- WHICH I S CONTRARY TO THE INSTRUCTION NO.3/2010 DATED 23 RD MARCH, 2010 ISSUED BY CBDT. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD.CIT(A) HAS ERRED IN DELETING DISALLOWANCE OF DEP RECIATION OF RS.5,73,791/- ON THE OPENING WDV OF P&M IN RESPECT OF THE AMOUNT OF CUSTOM DUTY ON IMPORT OF P&M IMPORTED IN THE YEAR 1994-95 OF RS.11,65,797/-. 3. THE APPELLANT CRAVES LEAVE, TO ADD, ALTER OR AME ND ANY GROUND OF APPEAL RAISED ABOVE AT THE TIME OF THE HE ARING. 2. THE BRIEF FACTS OF THE CASE, AS RECORDED BY THE LD.AO/CIT(A), ARE AS FOLLOWS. THE ASSESSEE FILED ITS RETURN OF INCOME DECLARING I NCOME OF RS.NIL, ON 30.11.2006. THE SAME WAS PROCESSED U/S 143(1) AND WAS SELECTED FOR SCRUTINY. THE ASSESSEE COMPANY IS ENGAGED IN THE B USINESS OF MANUFACTURING, TRADING AND JOB WORK OF MENS SUITS, JACKETS AND TROUSERS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AS SESSEE HAD PRODUCED BOOKS OF ACCOUNT WHICH HAVE BEEN TEST-CHECKED. DUR ING THE ASSESSMENT PROCEEDINGS, THE LD. AO OBSERVED THAT THE ASSESSEE HAD TAKEN A FOREIGN CURRENCY LOAN (ECB) OF USD 3 MILLION FOR THREE YEAR S TOWARDS WORKING ITA NO.2887/DEL/2013 3 CAPITAL REQUIREMENTS, VIDE AGREEMENT DATED 5.8.97. THE AGREEMENT WAS ENTERED INTO BETWEEN KB & T LTD. (EARLIER NAME OF T HE ASSESSEE COMPANY) AND THAKRAL BROTHERS PTE LTD., SINGAPORE(T HE COPIES OF THE SAID AGREEMENT AND THE RBI APPROVAL LETTER DATED 1. 7.97 IN THIS REGARD ARE ENCLOSED AT PAGES 38 TO 47 OF THE PAPER BOOK). THE LD. AO WHILE MAKING THE DISALLOWANCE OF RS.28,45,070/-, OBSERVED THAT THE DETAILS FILED BY THE ASSESSEE SHOW THAT THE ASSESSEE HAS BA SICALLY CLAIMED DEDUCTION FOR NOTIONAL LOSS ON ACCOUNT OF FOREIGN E XCHANGE FLUCTUATION. THE LD. AO FURTHER OBSERVED THAT FOR ALLOWANCE OF T HE LOSS ON ACCOUNT OF FOREIGN EXCHANGE FLUCTUATION TO BE CONSIDERED FOR D EDUCTION, THE LOSS MUST ACTUALLY BE SUFFERED IN THE RELEVANT PREVIOUS YEAR AND ACTUAL SUFFERING WOULD ARISE ONLY AT THE TIME OF REMITTANC ES AND NOT BEFORE. THE LD. AO RELIED UPON THE DECISIONS OF INDIAN OVER SEAS BANK, REPORTED IN 246 ITR 206 (MAD.) AND THE HONBLE SUPREME COURT DECISION IN THE CASE OF KARAM CHAND THAPAR AND BROS (1969), DISALLO WED THE LOSS SUFFERED ON ACCOUNT OF FOREIGN EXCHANGE FLUCTUATION AMOUNTING TO RS.28,45,070/- CLAIMED BY THE ASSESSEE AS REVENUE E XPENSES. ITA NO.2887/DEL/2013 4 AGGRIEVED BY THE ORDER OF THE LD.AO, THE ASSESSEE W ENT IN APPEAL BEFORE THE LD.CIT(A). 3. BEFORE THE LD.CIT(A), THE ASSESSEE ARGUED THAT T HE SAID LOAN WAS DISBURSED TO THE ASSESSEE BY THE OVERSEAS PARTY IN FOREIGN CURRENCY, DURING THE PREVIOUS YEAR RELEVANT TO ASSESSMENT YEA R 1998-99, AND ALSO UTILIZED FULLY BY THE ASSESSEE IN THE SAME YEAR FOR THE PURPOSE FOR WHICH IT WAS TAKEN. THE ASSESSEE SUBMITTED THAT THE DEVA LUATION LOSSES WERE DULY DECLARED IN THE RESPECTIVE PROFIT & LOSS ACCOU NT OF THE RELEVANT FINANCIAL YEARS AND, THE LOSSES WERE CLAIMED U/S 37 (1) OF THE ACT, IN THE RESPECTIVE ASSESSMENT YEARS WHICH WERE ACCEPTED BY THE DEPARTMENT IN THE ASSESSMENTS MADE U/S 143(3) FOR THE ASSESSMENT YEARS 1998-99 AND 1999-2000. THE ASSESSEE ALSO SUBMITTED THAT THE SA ID ISSUE HAS BEEN DECIDED BY THE ITAT VIDE ITS ORDER DATED 29.5.2009 PASSED FOR ASSESSMENT YEAR 2000-01. THE ASSESSEE ALSO SUBMITT ED THAT THERE HAS BEEN NO FRESH FOREIGN LOAN FUNDS BEING RECEIVED DUR ING THE PREVIOUS YEAR UNDER CONSIDERATION TO BE DEPLOYED AFRESH. THE ASSE SSEE FURTHER SUBMITTED THAT THE GAIN ARISING ON ECB HAS BEEN OFF ERED FOR TAXATION BY ITA NO.2887/DEL/2013 5 THE ASSESSEE WHICH HAS BEEN ACCEPTED BY THE AO FOR AY 2005-06. THE LD.CIT(A) HELD AS UNDER:- THUS, THE ASSESSING OFFICER CANNOT BLOW HOT AND COLD AT THE SAME TIME BY CONSIDERING THE GAIN AS INCOME ON REVENUE A CCOUNT AND NOT ALLOWING THE EXPENSE BY CONSIDERING THE SAME ON CAP ITAL ACCOUNT. IN VIEW OF THE ABOVE FACTS, IT IS CLEAR THAT THE ECB L OAN WAS UTILIZED FOR REVENUE PURPOSES IN THE YEAR OF RECEIPT AS WELL AS REMAIN UTILIZED FOR IN WORKING CAPITAL ITEMS AS ON 31/3/2006. THUS, THE DE VALUATION LOSS WAS IN THE NATURE OF REVENUE LOSS SINCE THE ECB FUNDS H AD BEEN FULLY UTILIZED FOR MEETING THE WORKING CAPITAL REQUIREMENTS. THERE FORE, THE SAME IS FULLY ALLOWABLE U/S 37(1) OF THE ACT SINCE ALL COND ITIONS LAID DOWN IN THAT SECTION WERE FULLY MET. RELIANCE HAS BEEN PLAC ED ON THE FOLLOWING JUDICIAL DECISIONS:- 1. CIT VS WOODWARD GOVERNOR INDIA (P) LTD. (2007) 2 94 ITR 451 (DEL). 2. SUTLEJ COTTON MILLS LTD. VS CIT (1979) 116 ITR 1 (SC). 3. CIT VS INTERNATIONAL COMBUSTION (I) PVT. LTD. (1 982) 137 ITR 184 (CAL.). 4. CIT VS V.S. DEMPO & CO. (P) LTD. (1994) 206 ITR 291 (BOM). 5. CIT VS IBM WORLD TRADE CORPORATION (1986) 161 IT R 673 (BOM.). 6. OIL & NATURAL GAS CORPN. LTD. VS DCIT (2002) 83 ITD 151 (DEL.) (SB). I HAVE CONSIDERED THE SUBMISSIONS OF THE APPELLANT, THE FINDINGS OF THE AO AND THE FACTS ON RECORD. PERUSAL OF THE FACT S ON RECORD SHOW THAT THE APPELLANT IS REGULARLY FOLLOWING THE MERCANTILE BASIS OF ACCOUNTING AND THE TREATMENT IN THE ACCOUN TS OF FOREIGN EXCHANGE TRANSACTIONS IS ACCORDING TO THE ACCOUNTIN G STANDARDS. AS PER THE STATED POLICY THE REVENUE TRANSACTIONS I N FOREIGN ITA NO.2887/DEL/2013 6 CURRENCY ARE GENERALLY RECORDED AT THE EXCHANGE RAT E PREVAILING AT THE TIME OF TRANSACTION AND THE FOREIGN CURRENCY ASSETS AND LIABILITIES OTHER THAN COVERED BY FORWARD EXCHANGE CONTRACT ARE RESTATED INTO RUPEES AT THE RATE OF EXCHANGE PREVAI LING ON THE BALANCE SHEET DATE. THE POLICY FOR ACCOUNTING THE F OREIGN EXCHANGE FLUCTUATION IS CONSISTENT AND IS BEING FOL LOWED FROM YEAR TO YEAR. THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS WOO DWARD GOVERNOR INDIA LTD. 223 CTR 7 HAS BEEN AFFIRMED THE DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS WOODWARD GOVERNOR PVT. LTD. 210 CTR (DELHI). THE OPERATIVE P ART AFFIRMED IS AS UNDER: 'IT IS IMPORTANT TO NOTE THAT FOREIGN CURRENCY NOTE S, BALANCE IN BANK ACCOUNTS DENOMINATED IN A FOREIGN CURRENCY, AND RECEIVABLES / PAYABLES AND LOANS DENOMINATED IN A F OREIGN CURRENCY AS WELL AS SUNDRY CREDITORS ARE A MONETARY ITEMS WHICH HAVE TO BE VALUED AT THE CLOSING RATE UNDER A S-LL. UNDER PARA 5, A TRANSACTION IN A FOREIGN CURRENCY A MOUNT THE EXCHANGE RATE BETWEEN THE REPORTING CURRENCY AN D THE FOREIGN CURRENCY AT THE DATE OF THE TRANSACTION. TH IS IS KNOWN AS RECORDING OF TRANSACTION ON INITIAL RECOGN ITION. PARA 7 OF AS-LL DEALS WITH REPORTING OF THE EFFECTS OF CHANGES IN EXCHANGE RATES SUBSEQUENT TO INITIAL RECOGNITION . PARA 7(A) INTER ALIA STATES THAT ON EACH BALANCE SHEET M ONETARY ITEMS, ENUMERATED ABOVE, DENOMINATED IN A FOREIGN CURRENCY SHOULD BE REPORTED USING THE CLOSING RATE. IN CASE OF REVENUE ITEMS FALLING UNDER SECTION 37(1), PARA 9 OF AS-LL WHICH DEALS WITH RECOGNITION OF EXCHANGE DIFFERENCE S, NEED TO BE CONSIDERED. UNDER THAT PARA, EXCHANGE DIFFERE NCES ARISING ON FOREIGN CURRENCY TRANSACTIONS HAVE TO BE RECOGNIZED AS INCOME OR AN EXPENSE IN THE PERIOD IN WHICH THEY ARISE, EXCEPT AS STATED IN PARA 10 AND PARA 11 WHICH DEALS WITH EXCHANGE DIFFERENCES ARISING ON REPAYMEN T OF LIABILITIES INCURRED FOR THE PURPOSE OF ACQUIRING F IXED ASSETS, WHICH TOPIC FALLS UNDER SECTION 43A. PARA 9 OF AS-L L RECOGNIZES EXCHANGE DIFFERENCES AS INCOME OR EXPENS E. IN CASES WHERE, E.G. THE RATE OF DOLLAR RISES VIS-A-VI S THE INDIAN RUPEES, THERE IS AN EXPENSE DURING THAT PERIOD. THE ITA NO.2887/DEL/2013 7 IMPORTANT POINT TO BE NOTED IS THAT AS-LL STIPULATE S EFFECT OF CHANGES IN EXCHANGE RATE VIS-A-VIS MONETARY ITEMS DENOMINATED IN A FOREIGN CURRENCY TO BE TAKEN INTO ACCOUNT FOR GIVING ACCOUNTING TREATMENT ON THE BALANCE SHEE T DATE. THEREFORE, AN ENTERPRISE HAS TO REPORT THE OUTSTAND ING LIABILITY RELATING TO IMPORT OF RAW MATERIAL USING CLOSING RATE OF EXCHANGE. ANY DIFFERENCE, LOSS OR GAIN, ARI SING ON CONVERSION OF THE SAID LIABILITY AT THE CLOSING RAT E, SHOULD BE RECOGNIZED IN THE P&L A/C FOR THE REPORTING PERIOD CIT VS WOODWARD GOVERNOR INDIA (PVT.) LTD & OTHERS (2007) 210 CTR (DEL) 354 'AFFIRMED.' THE HON'BLE ITAT SPL. BENCH (DELHI) IN THE CASE OF ONGC LTD. VS DCIT 83 ITD 151 DELHI HAS OBSERVED AS UNDER: 'BEFORE CONCLUDING WE WOULD LIKE TO POINT OUT THAT THE ASSESSEE'S CLAIM FOR LOSS ARISING AS A RESULT OF FL UCTUATION IN FOREIGN EXCHANGE RATES ON THE CLOSING DAY OF THE YE AR HAS BEEN DISALLOWED BY THE AO, INTER ALIA, ON THE GROUN D THAT THIS LIABILITY WAS CONTINGENT LIABILITY AND THE LOS S WAS NOTIONAL ONE. THE MAIN INGREDIENT OF A CONTINGENT L IABILITY IS THAT IT DEPENDS UPON HOPING OF CERTAIN EVENT. WE AR E OF THE CONSIDERED OPINION THAT IN THE CASE OF ASSESSEE, TH E 'EVENT' I. E. THE CHANGE IN THE VALUE OF FOREIGN CURRENCY H AS ALREADY TAKEN PLACE IN THE CURRENT YEAR. THEREFORE, THE LOS S INCURRED BY THE ASSESSEE IS A FATE ACCOMPLI AND NOT A NOTION AL ONE.' AFTER CAREFUL CONSIDERATION OF THE FACTS OF THE CAS E AND THE DECISIONS OF THE HON'BLE SUPREME COURT AND ITAT SPL . BENCH, DELHI DISCUSSED ABOVE THE ONLY CONCLUSION WHICH CAN BE DRAWN IS THAT THE APPELLANT'S CLAIM OF LOSS ON ACCOUNT OF FL UCTUATION IN FOREIGN CURRENCY RATE IS ALLOWABLE. THE APPELLANT I S REGULARLY FOLLOWING THE MERCANTILE SYSTEM OF ACCOUNTING AND F OLLOWING THE ACCOUNTING STANDARDS. THE LOSSES CLAIMED ARE ON THE REVENUE ACCOUNT A FACT WHICH HAS NOT BEEN DISPUTED EVEN BY THE AO. IN VIEW OF THE ABOVE, THE LOSSES CLAIMED BY THE APPELL ANT ON ACCOUNT OF FOREIGN EXCHANGE FLUCTUATION ARE AN ALLOWABLE EX PENDITURE. ITA NO.2887/DEL/2013 8 4. WE HAVE PERUSED THE PAPER BOOK AND THE RELEVANT ORDERS PASSED BY THE ITAT ON THIS ISSUE AND HAVE HEARD THE SUBMISSIO NS MADE BY BOTH THE PARTIES. THE ISSUE IN DISPUTE IS SQUARELY COVERED B Y THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF WOOD WORLD GOV ERNOR INDIA PVT. LTD., REPORTED IN (2009) 312 ITR 254 (SC), WHEREIN IT HAS BEEN HELD THAT INCREASE IN LIABILITY ON REVENUE ACCOUNT DUE TO FOR EIGN EXCHANGE FLUCTUATION AS PER THE EXCHANGE RATE PREVAILING AS ON THE LAST DAY OF THE FINANCIAL YEAR WAS NEITHER NOTIONAL OR A CONTINGENT LIABILITY AND THE SAME, THERE WAS ALLOWABLE AS A DEDUCTION. WE DO NOT FIND ANY INFIRMITY IN THE ORDER PASSED B Y THE LD.CIT(A). WE, THEREFORE, DISMISS THIS GROUND OF APPEAL. 5. COMING TO GROUND NO.2, DURING THE COURSE OF ASSE SSMENT PROCEEDINGS, THE LD.AO OBSERVED THAT THE ASSESSEE H AD PAID CUSTOMS DUTY FOR IMPORT OF MACHINERY IN THE YEAR 1994-95 AND TRA NSFERRED RS.11,65,797/- AS SECURITY DEPOSIT TO THE CUSTOMS D EPARTMENT IN THE SAID YEAR. SINCE THE ASSESSMENT BY THE CUSTOMS DEPARTME NT WAS STILL PENDING, THE UNILATERAL ACTION OF THE ASSESSEE IN C APITALIZING THE AFORESAID ITA NO.2887/DEL/2013 9 AMOUNT WAS NOT FOUND IN ACCORDANCE WITH THE LAW BY THE LD. AO AND, THEREFORE, THE DEPRECIATION CLAIMED ON THE SAME IN THE EARLIER ASSESSMENTS WAS DISALLOWED AND ADDED BACK TO THE IN COME OF THE ASSESSEE. IN THE RESPECT OF INSTANT ASSESSMENT YEA R, THE ASSESSEE HAD SUBMITTED DURING THE ASSESSMENT PROCEEDINGS THAT, T HE SAID AMOUNT HAS BEEN INCLUDED IN THE WDV OF THE PLANT AND MACHINERY AND CLAIMED DEPRECIATION ON THE SAME. THE ASSESSMENT HAS STILL NOT BEEN FINALIZED BY THE CUSTOMS DEPARTMENT. ACCORDINGLY, THE LD. AO DI SALLOWED THE DEPRECIATION CLAIMED ON THE SAME BY THE ASSESSEE DU RING THE RELEVANT YEAR AMOUNTING TO RS.1,43,448/-. AGGRIEVED BY THE ORDER PASSED BY THE LD. AO, THE AS SESSEE WENT IN APPEAL BEFORE THE LD.CIT(A). DURING THE APPELLATE PROCEEDINGS, THE ASSESSEE SUBM ITTED THAT THE LD. AO HAS WRONGLY MENTIONED THE ADDITION AT RS.5,73,791/- , BEING THE OPENING WDV INSTEAD OF RS.1,43,448/-, BEING THE DEPRECIATIO N CHARGED @ 25% OF RS.5,73,791/-. THE ASSESSEE SUBMITTED THAT THE CUSTOMS RULES HAVE BEEN CHANGED SINCE LONG AND THE REQUIREMENT OF PAYI NG PROVISIONAL DUTY ITA NO.2887/DEL/2013 10 AND A SECURITY DEPOSIT TILL FINAL ASSESSMENT IS MAD E, HAS BEEN REMOVED FROM THE STATUTE. THE ASSESSEE SUBMITTED BEFORE TH E LD.CIT(A) THAT, THE CURRENT POSITION UNDER CUSTOMS LAW IS THAT THE GOOD S CAN ONLY BE MOVED, OUT AFTER PAYING THE ASSESSED CUSTOMS DUTY. THEREF ORE, THE ISSUE IS LYING DORMANT WITH THE SAID AUTHORITIES WHO ARE NOT INCLI NED TO TAKE IT UP SINCE THEIR REVENUE IS MORE THAN ADEQUATELY COVERED BY TH E SAID SECURITY DEPOSIT. IT WAS SUBMITTED BY THE ASSESSEE BEFORE T HE LD.CIT(A) THAT A PERSONNEL WAS SPECIALLY DEPUTED BY THE ASSESSEE TO GET THE MATTER SETTLED WITH THE CUSTOMS DEPARTMENT, WHICH DID NOT SERVE AN Y PURPOSE. THEREFORE, AS A PRUDENT BUSINESSMAN, IT WAS DECIDED NOT TO SPEND ANY FURTHER COST IN COLLECTING THE SAID REFUND AND TO RIGHT IT OFF IN THE BOOKS. 6. THE LD.CIT(A) OBSERVED THAT THE RIGHT OFF WAS MA DE BY CAPITALIZING THE SAME BY ADDING IT TO THE COST OF THE MACHINERY SINCE IT WAS PAID OFF AND PERTAINED TO ITS ACQUISITION ONLY. THE ASSESSE E ALSO SUBMITTED THAT THIS ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESS EE BY THE HONBLE ITAT VIDE ITS ORDER DATED 29.5.2009 FOR ASSESSMENT YEAR 2003-04 AND 2004-05. THE LD.CIT(A) HELD AS UNDER:- ITA NO.2887/DEL/2013 11 I HAVE CONSIDERED THE SUBMISSIONS OF THE APPELLANT, THE FINDINGS OF THE AO AND THE FACTS ON RECORD. PERUSAL OF THE FACT S ON RECORD SHOW THAT THE HON'BLE ITAT IN THE APPELLANT'S OWN C ASE FROM A. Y. 2003-04 & 2004-05 ON IDENTICAL FACTS HAS DECIDED TH E ISSUE IN FAVOR OF THE APPELLANT BY MAKING THE FOLLOWING OBSE RVATIONS: 'PARA NO. 14. WITH THE ASSISTANCE OF LEARNED REPRESENTATIVES, WE HAVE GONE THROUGH THE RECORDS C AREFULLY AND FIND THAT LEARNED CIT(APPEALS) HAS UPHELD THE DISALLOWANCE OF DEPRECIATION ON THE GROUND THAT POS SIBILITY OF RECOVERY OF THIS AMOUNT CANNOT BE RULED OUT. LEA RNED FIRST APPELLATE AUTHORITY HAS FURTHER OBSERVED THAT ASSESSEE HAS NOT WAIVED OFF ITS RIGHTS OVER SECURITY DEPOSIT IN FAVOUR OF CUSTOMS DEPARTMENT. IN OUR OPINION, THE LEARNED FIRST APPELLATE AUTHORITY IS NOT JUSTIFIED IN CONFIRMING THE DISALLOWANCE OF DEPRECIATION. THE ASSESSEE HAS CAPI TALIZED THE SECURITY DEPOSIT BY TREATING IT AT PAR WITH THE CUSTOMS DUTY. IT HAS WAITED FOR 8 LONG YEARS AND WHEN REALI ZED THAT FOLLOW UP ACTION WITH THE CUSTOMS DEPARTMENT WOULD BE A FUTILE EXERCISE ONLY THEN TOOK A DECISION OF CAPITA LIZING THIS AMOUNT N THE VALUE OF THE ASSETS. IN CASE IN SUBSEQ UENT YEARS ASSESSEE WAS ABLE TO GET THE AMOUNT THE IT WILL BE OFFERED FOR TAXATION OR IT WILL BE BROUGHT TO TAX UNDER SEC. 41 (1) OF THE ACT. NO PREJUDICE IS CAUSED TO THE REVENUE IF DEPRE CIATION IS ALLOWED BY PERMITTING THE ASSESSEE FOR CAPITALIZING OF THIS SECURITY DEPOSIT. IN VIEW OF THE ABOVE DISCUSSION, WE ALLOW BOTH THES E GROUNDS OF APPEAL AND DIRECT THE ASSESSING OFFICER TO GRANT DEPRECIATION ON THE ENHANCED VALUE OF THE ASSETS. ' THE FACTS AND CIRCUMSTANCES REMAINING THE SAME, RES PECTFULLY FOLLOWING THE ORDER OF THE HON'BLE ITAT IN THE APPE LLANT'S OWN CASE, THIS GROUND OF APPEAL IS ALLOWED IN FAVOR OF THE APPELLANT. THE DISALLOWANCE MADE BY THE AO IS DELETED. ITA NO.2887/DEL/2013 12 7. WE DO NOT FIND ANY INFIRMITY WITH THE FINDINGS O F THE LD.CIT(A), IN FOLLOWING THE ORDER DATED 29.5.2009 PASSED BY THE I TAT, FOR AY 2003- 04 AND 2004-05, WE HOLD THAT THE ISSUE STANDS COVER ED. THIS GROUND OF THE REVENUE, THEREFORE, STANDS DISMISSED. 8. IN THE RESULT, THE APPEAL OF THE FILED BY THE RE VENUE IS DISMISSED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 06.11.201 5. SD/- SD/- [N.K. SAINI] [BEENA A. PILLAI] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED, 6 TH NOVEMBER, 2015. DK COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT AR, ITAT, NEW DELHI.