The ACIT,Anand Circle, Anand V. National Dairy Development Board, Anand

ITA 2928/AHD/2008

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 57067 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 5 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 20-12-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 12-08-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Retrospective amendment; Question of law
• Section: 32

Judgement Text

, , , , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD , .. !', #$ # % BEFORE SHRI MUKUL KR.SHRAWAT, JUDICIAL MEMBER AND SHRI B.P.JAIN, ACCOUNTANT MEMBER APPEAL(S) BY APPELLANT VS. RESPONDENT SL. NO(S). ITA NO(S) ASSESSMENT YEAR(S) APPELLANT (S) RESPONDENT(S) 1. 2928/AHD/2008 2005-06 ACIT ANAND CIRCLE ANAND NATIONAL DAIRY DEVELOPMENT BOARD, ANAND-388 001 PAN: AABCN 2029 C 2. 4457/AHD/2007 2004-05 -DO- -DO- 3. 2810/AHD/2008 2005-06 ASSESSEE REVENUE 4. 4452/AHD/2007 2004-05 ASSESSEE REVENUE ASSESSEE BY : SHRI S.N.SOPARKAR, SR.ADV. SHRI YOGESH SHAH REVENUE BY: ALOK JOHRI, CIT-LEARNED DEPARTMENTAL REPRESENTATIVE '& ' ($/ // / DATE OF HEARING : 20/12/2011 *+, ' ($ / DATE OF PRONOUNCEMENT : 31.1.2012 #-/ O R D E R PER SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER : THE ARE CROSS APPEALS FOR A.Y. 2004-05 ARISING F ROM THE ORDER OF THE CIT(A)-IV, BARODA DATED 28.9.2007 AND FOR A.Y. 2005-06 ARISING FROM THE ORDER OF THE CIT(A)-IV, BARODA DATED 28.5. 2008. [A] REVENUES APPEALS ; ITA NO.4457/AHD/2007 FOR A.Y. 2004-05 AND ITA NO.2928/AHD/2008 FOR A.Y. 2005-06. 2. GROUND NO.1 (FOR A.Y. 2004-05) READS AS UNDER ITA NOS.2928/AHD/08,4457/AHD/07 (REVENUE) & 2810/AHD/08, 4452/AHD/07(ASSESSEE) ACIT VS. NDDB AYS 2004-05 & 2005-06 - 2 - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LEARNED CIT(APPEALS) ERRED IN DIRECTING THE A.O . TO COMPUTE THE DEPRECIATION ON THE W.D.V. FOR THE A.Y. 2003- 04, WITHOUT CONSIDERING THE FACT THAT THE ASSETS WH ICH WERE ACQUIRED MORE THAN 10 YEARS BACK AND USED WHEN THE ASSESSEE WAS NOT A TAXABLE ENTITY, GAVE A DISTORTED PICTURE OF ITS PROFIT & LOSS A/C IN THIS YEAR WHEN THE ASSESSE E CLAIMED DEPRECIATION ON THE ORIGINAL COST OF ASSETS FOR THE FIRST TIME IN A.Y. 2003-04 AND ALSO IGNORING THE UNDERLYING PR INCIPLE OF ACCOUNTANCY THAT THE WEAR AND TEAR OF THE ASSETS UTILIZED BY AN ASSESSEE FOR EARNING PROFIT HAS TO BE CONSIDE RED I.E. NOTIONAL DEPRECIATION AS LAID DOWN IN CIT VS. BOMBA Y STATE TRANSPORT CORP. 118 ITR 399, 405 (BOM) AND ALSO NO T FOLLOWING THE RATION LAID DOWN IN GR GOVINDRAJULU N AIDU VS CIT 90 ITR 13 (MAD) WHEREIN DEPRECIATION IS CAPITAL LOSS WHETHER CLAIMED OR NOT AND WHICH IS CONTRARY TO THE SPIRIT OF PROVISION OF SECTION 32. 2.1. NATIONAL DAIRY DEVELOPMENT BOARD (HEREINAFT ER REFERRED TO AS NDDB) HAS SEVERAL LOCATIONS AND ITS HEAD OFFICE I S AT ANAND (GUJARAT) AND REGIONAL OFFICES ARE IN DELHI, MUMBAI, CALCUTTA , ETC. THE OBJECTIVE IS TO SUPPORT DAIRY CO-OPERATIVES. ITS MAIN ROLE IS T O PROMOTE, FINANCE AND TO PROVIDE TECHNICAL SUPPORT TO DAIRY CO-OPERATIVES. IN THE PAST, THE NDDB WAS NOT A TAXABLE ENTITY IN VIEW OF A SPECIAL PROVISION OF SECTION 44 OF NATIONAL DAIRY DEVELOPMENT BOARD ACT, 1987. HOWEVER, VIDE SECTION 162 OF FINANCE ACT OF 2002 AN D SECTION 44 OF NDDB ACT, THE SAID SPECIAL PROVISION WAS OMITTED W.E.F. 1.4.2003 . IN CONSEQUENCE THEREOF, THE ASSESSEE-BOARD HAD BECOME A TAXABLE ENTITY FROM ASST.YEAR 2003-04. IT IS WORTH TO MENTION THA T FOR A.Y. 2003-04 AN ORDER OF THE TRIBUNAL DATED 21.4.2011 IS ON RECORD AND TO BE REFERRED IF NEED BE AT THE APPROPRIATE PLACES. IN RESPECT OF THE ABOVE GROUND, IT WAS NOTED BY THE AO THAT THE ASSESSEE HAD CLAIMED DEPRE CIATION OF ITA NOS.2928/AHD/08,4457/AHD/07 (REVENUE) & 2810/AHD/08, 4452/AHD/07(ASSESSEE) ACIT VS. NDDB AYS 2004-05 & 2005-06 - 3 - RS.24,35,61,619/-. ON THE BASIS OF THE DETAILS IN RESPECT OF THE DEPRECIATION, IT WAS FOUND THAT THE DEPRECIATION ALLOWANCE WAS CLAIMED ON THE COST OF THE ASSETS AFTER ADJUSTMENT BY THE A MOUNT OF GRANT RECEIVED. AS PER AO, THE DEPRECIATION WAS NOT COMPUTED ON T HE BASIS OF THE WRITTEN DOWN VALUE OF THE BLOCK OF ASSETS AS ON 1.4.2003. THE AO HAS NOTED THAT FOR A.Y. 2003-04 SIMILAR FACT WAS NO TICED AND THE AMOUNT OF DEPRECIATION WAS RE-COMPUTED BY THE AO. THEREA FTER, IN THE IMPUGNED ASST.ORDER, THE AO HAS DISCUSSED THE VIEW TAKEN FOR A.Y. 2003- 04, THE IMMEDIATE PRECEDING ASST.YEAR, AND FINALLY WORKED OUT THE DEPRECIATION AT RS.6,85,47,257/- AS AGAINST THE CLA IM OF THE ASSESSEE AND ACCORDINGLY REDUCED THE SAME. 3. THE MATTER WAS CARRIED BEFORE THE FIRST APPELLAT E AUTHORITY WHO HAS FOLLOWED THE VIEW OF THE ITAT PRONOUNCED IN A.Y. 20 03-04 AND DIRECTED THE AO TO COMPUTE THE DEPRECIATION ACCORDINGLY. NO W THE REVENUE IS BEFORE US. 4. FROM THE SIDE OF THE REVENUE, LD.DR MR. ALOK JOH RI APPEARED AND STATED THAT ALTHOUGH THE ISSUE OF DEPRECIATION HAS BEEN DECIDED AGAINST THE REVENUE BY THE TRIBUNAL AND THAT ORDER OF THE TRIBU NAL (IN THE CASE OF NATIONAL DAIRY DEVELOPMENT BOARD VS. ADDL.CIT) IS R EPORTED AS [2009]310 ITR (AT) 325 (AHMEDABAD) BUT STILL THE QU ESTION IS THAT IN VIEW OF THE DEFINITION OF WDV AS PRESCRIBED U/S.43( 6) OF IT ACT, MEANS THE ACTUAL COST TO THE ASSESSEE LESS DEPRECIATION A CTUALLY ALLOWED. SINCE IN THE CASE OF THE ASSESSEE THE ADMITTED FACTUAL PO SITION IS THAT THE DEPRECIATION WAS NOT PROVIDED IN THE BOOKS OF ACCOU NT IN THE PAST, THERE ITA NOS.2928/AHD/08,4457/AHD/07 (REVENUE) & 2810/AHD/08, 4452/AHD/07(ASSESSEE) ACIT VS. NDDB AYS 2004-05 & 2005-06 - 4 - WAS NO QUESTION OF GRANTING THE SAME, NEVERTHELESS , A NOTIONAL FIGURE OF DEPRECIATION SHOULD HAVE BEEN TAKEN INTO ACCOUNT SO AS TO ARRIVE AT THE CORRECT WDV. LD. DR MR.ALOK JOHRI HAS ALSO ARG UED THAT THE ACTUAL COST IS DEFINED IN SECTION 43(1) OF IT ACT. THAT ACTUAL COST HAS ADMITTEDLY BEEN REDUCED BY THE GRANTS RECEIVED. HE HAS ALSO REFERRED SECTION 32(1) OF IT ACT AND ARGUED THAT A DEPRECIAT ION IN RESPECT OF BLOCK OF ASSETS ARE TO BE COMPUTED ANNUALLY TO ARRIVE AT THE WDV FOR A PARTICULAR YEAR. LD.DR HAS FURTHER ELABORATED HIS ARGUMENT THAT AS PER THE DEFINITION OF ACTUAL COST AS PRESCRIBED U/S.4 3(1) OF IT ACT READ ALONG WITH EXPLANATION THE COST SHOULD BE ON THE DA TE OF ACQUISITION. IN THE PRESENT CASE, SINCE THE DATE OF ACQUISITION WAS NOT THE ASSESSMENT YEAR UNDER CONSIDERATION, BUT IT WAS ACQUIRED MUCH EARLI ER, THEREFORE THE ACTUAL COST SHOULD NOT BE THE WDV. HE HAS EXPLAINED THAT S INCE THE DATE OF ACQUISITION OF THE ASSETS WAS MUCH EARLIER HENCE TH E CARRIED OVER AMOUNT WAS NOTHING BUT THE WDV AND THAT OUGHT NOT TO BE TH E COST AND SINCE IT WAS IN THE NATURE OF WDV SO IT HAD TO BE AS PER THE NORMS OF DEPRECIATION PRESCRIBED IN THE STATUTE. HE HAS ALS O REFERRED EXPLANATION- 3 TO SECTION 43(1) THAT THE PURPOSE OF THE CLAIM OF HIGHER DEPRECIATION WAS TO REDUCE THE TAX LIABILITY, HENCE THE AO HAS R IGHTLY RECOMPUTED THE DEPRECIATION. LD.DR HAS ALSO REFERRED EXPLANATIO N 5 TO SECTION 43(1) OF THE IT ACT FOR THE LEGAL PROPOSITION THAT THE ACTU AL COST TO THE ASSESSEE SHOULD BE THE ACTUAL COST AS REDUCED BY AN AMOUNT OF DEPRECIATION CALCULATED AT THE RATE IN FORCE ON THAT DATE THAT W OULD HAVE BEEN ALLOWABLE HAD THE ASSET BEEN USED FOR THE BUSINESS PURPOSE. LD. DR HAS SUMMED UP THAT THE ASSETS IN QUESTION HAVE ACTUALLY BEEN USED FOR THE PURPOSE OF THE BUSINESS OF THE ASSESSEE, THEREFORE THE ACTUAL COS T OUGHT TO HAVE BEEN ITA NOS.2928/AHD/08,4457/AHD/07 (REVENUE) & 2810/AHD/08, 4452/AHD/07(ASSESSEE) ACIT VS. NDDB AYS 2004-05 & 2005-06 - 5 - REDUCED BY THE AMOUNT OF DEPRECIATION YEAR-WISE AT THE RATES ENFORCEABLE IN THOSE YEARS. 5. FROM THE SIDE OF THE RESPONDENT-ASSESSEE, LD.ARS MR.S.N.SOPARKAR AND MR.YOGESH SHAH APPEARED AND PLACED RELIANCE ON THE ORDER OF THE TRIBUNAL REFERRED SUPRA AND ARGUED THAT ONCE A VIEW HAS ALREADY BEEN TAKEN, THEN AT PRESENT THERE IS NO POWER TO REVIEW THAT ORDER. 6. HAVING HEARD THE SUBMISSIONS OF BOTH THE SIDES, WE ARE OF THE CONSIDERED VIEW THAT THE ISSUE IN HAND NOW STOOD CO VERED BY THE SAID ORDER OF THE TRIBUNAL; RELEVANT PORTION IS REPRODUC ED BELOW:- THE FIFTH GROUND IS AGAINST THE DISALLOWANCE OF R S.26,16,20,204 OUT OF DEPRECIATION CLAIMED OF RS.35,75,40,636/-. THE FACTS OF THE CASE ARE THAT THE ASSESSEE HAD CLAIMED DEPRECIATION OF RS.33,75,40,636 ON THE FULL AMOUNT OF ORIGINAL COST OF ITS ASSETS. THE ASSESSING OFFICER, HOWEVER, WAS OF THE VIEW THA T BESIDES REDUCTION OF THE GRANTS AMOUNT FROM THE COST OF ASS ETS, NOTIONAL DEPRECIATION ALSO SHOULD HAVE BEEN REDUCED AS IF TH E ASSESSEE HAD BEEN A TAXABLE ENTITY AND ACCORDINGLY, HAD BEEN ALL OWED DEPRECIATION SINCE THE DATE OF ITS INCEPTION. THE ASSESSEE CLAIMED THAT AS PER THE PROVISIONS OF SECTION 43(6) THE WRI TTEN DOWN VALUE HAD TO BE COMPUTED BY REDUCING THE DEPRECIATION ACT UALLY ALLOWED AGAINST THE COST OF THE ASSETS AND THAT THERE WAS N O CONCEPT OF MENTAL CALCULATIONS OF THE DEPRECIATION AS HAVING B EEN ALLOWED IN THE TAX-FREE PERIOD. THEREFORE, THE DEPRECIATION D URING THE CURRENT YEAR HAS TO BE COMPUTED ON THE ORIGINAL COST OF THE ASSETS. THE ASSESSING OFFICER REJECTED THE CONTENTION OF THE AS SESSEE, AS IN HIS VIEW, THE PRINCIPLE GOVERNING THE DEPRECIATION ALLO WANCE IS THE EFFECTIVE LIFE OF THE DEPRECIABLE ASSETS AND THE EX PENDITURE INCURRED ON ITS WEAR AND TEAR FOR THE PERIOD OF ITS CONSIDER ATION AND SINCE THE ASSESSEE HAD BEEN USING THE ASSETS IN QUESTION FOR YEARS, SUCH ASSETS MUST HAVE DEPRECIATED GREATLY BY THEIR USE A ND SOME OF THEM MIGHT HAVE REACHED THE STAGE OF BEING DISCARDED, HE NCE, IN ORDER ITA NOS.2928/AHD/08,4457/AHD/07 (REVENUE) & 2810/AHD/08, 4452/AHD/07(ASSESSEE) ACIT VS. NDDB AYS 2004-05 & 2005-06 - 6 - TO ARRIVE AT THE CORRECT INCOME, NORMAL WEAR AND TE AR OF THE ASSETS HAD TO BE TAKEN INTO ACCOUNT. . WE HAVE HEARD THE PARTIES AD CONSIDERED THE RIVAL SUBMISSIONS. SECTION 32 PROVIDES FOR THE DEPRECIATION ON THE WRI TTEN DOWN VALUE OF THE ASSET. SECTION 43(6) DEFINES THE WRITTEN D OWN VALUE TO MEAN IN THE CASE OF ASSETS ACQUIRED IN THE PREVIOUS YEAR LIKE BUILDING, PLANT AND MACHINERY, FURNITURE AND FIXTURES ETC., T HE ACTUAL COST OF THE ASSESSEE AND IN OTHER CASE THE ACTUAL COST TO T HE ASSESSEE LESS ALL DEPRECIATION ACTUALLY ALLOWED TO HIM UNDER THE ACT. THE SHORT CONTROVERSY IS, AS TO WHETHER, THE WRITTEN DOWN VA LUE (WDV) OF THE ASSET IS TO BE TAKEN AT THEIR ORIGINAL COST OR AS REDUCED BY THE NOTIONAL DEPRECIATION ACCOUNTED FOR IN THE BOOKS OF ASSESSEE AND DEEMED TO HAVE BEEN ALLOWED IN THE EARLIER YEARS WH EN THE ASSESSEE WAS NOT CHARGEABLE TO TAX. THE TERM ACTU ALLY ALLOWED CAME UP FOR CONSIDERATION BEFORE THE SUPREME COURT IN THE CASES OF STRAW PRODUCTS LTD. [1966] 60 ITR 156, DHARAMPUR LEATHER CO.LTD. [1966] 60 ITR 165, MAHENDRA MILLS [2000] 2 43 ITR 56, MADEVA UPENDRA SINAI V. UNION OF INDIA [1975] 98 IT R 209 WHEREIN IT HAS BEEN HELD THAT THE TERM ACTUALLY AL LOWED MEANS ALLOWED ACTUALLY UNDER THE ACT AND NOT NOTIONALLY. ACCEPTING THE THEORY PROPOUNDED BY THE ASSESSING OFFICER, AS UPHE LD BY THE COMMISSIONER OF INCOME-TAX (APPEALS) AND THEREBY RE DUCING NOTIONAL DEPRECIATION FOR COMPUTING THE DEPRECIATIO N TO ARRIVE AT THE SO-CALLED REAL EXPENDITURE HAS NO FORCE AND IS CONTRARY TO THE PROVISIONS OF LAW AND THE DECISIONS OF THE SUPREME COURT REFERRED TO ABOVE. IN THE EARLIER YEAR THE ASSESSEE WAS NOT LIABLE TO TAX AND THEREFORE THE QUESTION OF ALLOWING ANY DEPRECIATION TO THE ASSESSEE WOULD NOT ARISE. IN OUR OPINION, THE DEPRECIATION OF THE EXEMPTED PERIOD CANNOT BE SAID TO HAVE BEEN ALLOWED TO THE A SSESSEE. WHEREVER THE LEGISLATURE HAS WANTED TO REDUCE THE W RITTEN DOWN VALUE TO BE ASCERTAINED AFTER ALLOWING (NOTIONAL DE PRECIATION), IT HAS SPECIALLY PROVIDED SO, E.G. IN SECTION 10A(6) P ROVIDING FOR THE DEEMED ALLOWANCE OF DEPRECIATION FOR THE ASSESSMENT YEARS ENDING BEFORE APRIL 1, 2001. SECTION 10B(6) ALSO PROVIDES FOR SIMILAR DEEMED ALLOWANCE OF DEPRECIATION FOR ANY OF THE REL EVANT ASSESSMENT YEARS ENDING BEFORE APRIL 1, 2001. THES E ARE SPECIFIC ITA NOS.2928/AHD/08,4457/AHD/07 (REVENUE) & 2810/AHD/08, 4452/AHD/07(ASSESSEE) ACIT VS. NDDB AYS 2004-05 & 2005-06 - 7 - EXCLUSIONS AND NOT EXPOSITION OF LAW THAT DEPRECIAT ION OF THE EXEMPTED PERIOD HAS TO BE ASSUMED TO HAVE BEE ALLOW ED AND NOTIONALLY ALLOWED. IN OUR OPINION, IN THE PRESET CASE, THERE IS NO SUCH SPECIFIC PROVISION FOR DEEMED ALLOWANCE UNDER THE ACT AND, THEREFORE, THE WRITTEN DOWN VALUE IS TO BE ASCERTAI NED BY ACTUAL COST OF THE ASSETS. AS THE INCOME OF THE ASSESSEE WAS EXEMPT UNTIL EARLIER YEAR, NO NOTIONAL DEPRECIATION CAN BE ASSUM ED AND, THEREFORE, IT WOULD BE ENTITLED TO THE DEPRECIATION ON THE ORIGINAL COST OF THE ASSETS. WE ACCORDINGLY DIRECT THE ASSE SSING OFFICER TO ALLOW THE DEPRECIATION IN ACCORDANCE THEREWITH. 6.1. IT IS WORTH TO MENTION THAT FOR A.Y. 2003-04, THE REVENUE HAD GONE IN APPEAL BEFORE THE HONBLE GUJARAT HIGH COUR T A ND VIDE TAX APPEAL NO.672 OF 2008 ORDER DATED 22/12/2008 THIS G ROUND WAS DISMISSED AS FOLLOWS:- 10. IT IS NOT IN DISPUTE THAT THE PROVISIONS DO N OT ENVISAGE ANY NOTIONAL ALLOWANCE AND THE ASSESSING OFFICER THUS C ANNOT WORK OUT SUCH NOTIONAL ALLOWANCE AND REDUCE THE SAME FROM TH E DEPRECIATION CLAIMED. THE WORDS ACTUALLY ALLOWED M EANS ACTUALLY ALLOWED IN THE COURSE OF ASSESSMENT. THE ASSESSEE WAS NOT LIABLE TO BE TAXED AND HENCE, NO ASSESSMENTS WERE FRAMED F OR THE EARLIER YEARS. THEREFORE, IN ABSENCE OF ANY LEGAL INFIRMIT Y IN THE IMPUGNED ORDER OF TRIBUNAL, NO QUESTION OF LAW ARIS ES ON THIS COUNT. 6.2. WE HAVE BEEN TOLD THAT REVENUES SLP IN APPEAL (CIVIL) NO.CC9999/2009 DATED 31/07/2009 HAS ALSO BEEN DISMI SSED. 7. ONCE THE HONBLE THE COURTS HAVE HELD A VIEW IN FAVOUR OF ASSESSEE BY DULY ANALYZING THE PROVISIONS OF THE AC T, AS DISCUSSED HEREINABOVE, WE HEREBY HOLD THAT IN TERMS OF PROVIS IONS OF SECTION 43(6) ITA NOS.2928/AHD/08,4457/AHD/07 (REVENUE) & 2810/AHD/08, 4452/AHD/07(ASSESSEE) ACIT VS. NDDB AYS 2004-05 & 2005-06 - 8 - OF IT ACT, WDV MEANS THE ACTUAL COST TO THE ASSES SEE LESS DEPRECIATION ACTUALLY ALLOWED. SINCE IN THE PAST WHEN NO DEPREC IATION WAS ACTUALLY ALLOWED, THEREFORE THE ASSESSEE HAS RIGHTLY CLAIMED THE DEPRECIATION AS PER ITS RECORDS. WE HOLD ACCORDINGLY AND DISMISS THIS GROUND OF THE REVENUE FOR BOTH THE YEARS. 8. GROUND NO.2 FOR A.Y. 2004-05 AND GROUND NO.1 F OR A.Y. 2005- 06 OF THE REVENUE ARE REPRODUCED BELOW:- GROUND NO. 2 (FOR A.Y. 2004-05) READS AS UNDER: 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LEARNED CIT(APPEALS) ERRED IN DELETING THE ADDI TION OF INTEREST INCOME OF RS.32,11,90,382/- FOLLOWING THE ITATS DECISION FOR A.Y. 2003-04 AND IGNORING THE FACT THA T THE ASSESSEE WAS FOLLOWING CASH SYSTEM OF ACCOUNTING FO R INTEREST INCOME WHEN IT WAS NOT A TAXABLE ENTITY AN D SWITCHED OVER TO MERCANTILE SYSTEM OF ACCOUNTING WI TH RETROSPECTIVE EFFECT WHEN IT BECAME TAXABLE, SO THA T SUCH INTEREST INCOME ESCAPED FROM THE TAX NET. GROUND NO. 1 (FOR A.Y. 2005-06) READS AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(APPEALS) ERRED IN DELETING THE ADDI TION OF INTEREST INCOME OF RS.8,35,26,671/- FOLLOWING THE I TATS DECISION FOR THE A.Y. 2003-04 AND IGNORING THE FACT THAT THE ASSESSEE WAS FOLLOWING CASH SYSTEM OF ACCOUNTING FO R INTEREST INCOME WHEN IT WAS NOT A TAXABLE ENTITY AND SWITCHE D OVER TO MERCANTILE SYSTEM OF ACCOUNTING WITH RETROSPECTIVE EFFECT WHEN IT BECAME TAXABLE, SO THAT SUCH INTEREST INCOME ESC APED FROM THE TAX NET. 8.1. THE AO HAS OBSERVED THAT IN A.Y. 2003-04 THE A SSESSEE HAD CHANGED ITS METHOD OF ACCOUNTING IN RESPECT OF INTE REST INCOME. ACCORDING TO AO, FROM CASH BASIS THE ASSESSEE CHANG ED THE METHOD OF ITA NOS.2928/AHD/08,4457/AHD/07 (REVENUE) & 2810/AHD/08, 4452/AHD/07(ASSESSEE) ACIT VS. NDDB AYS 2004-05 & 2005-06 - 9 - ACCOUNTING OF INTEREST INCOME TO ACCRUAL BASIS. TH E AO HAS RAISED AN OBJECTION THAT WHEN THE ASSESSEE WAS NOT A TAXABLE ENTITY A DIFFERENT METHOD WAS ADOPTED BUT WHEN THE ASSESSEE HAD COME W ITHIN THE TAX AMBITS IT HAD CHANGED ITS METHOD OF ACCOUNTING RETR OSPECTIVELY. AFTER DISCUSSING THE PAST HISTORY, THE AO HAS CONCLUDED T HAT THE ASSESSEE HAS RECEIVED INTEREST OF RS.32,11,90,382/- WHICH WAS A CCOUNTED FOR IN THE FINANCIAL YEAR 2001-02 ON MERCANTILE BASIS. ACC ORDING TO HIM, THERE WAS NO MATERIAL CHANGE IN THE FACTS FOR THE YEAR UN DER CONSIDERATION, I.E. A.Y. 2004-05. THE INTEREST INCOME OF RS.32,11,90,3 82/- RECEIVED DURING THE YEAR THOUGH CREDITED IN THE F.Y. 2001-02 IS LIA BLE TO TAX FOR A.Y. 2004-05. RESULTANTLY THE SAID AMOUNT WAS TAXED. 9. WHEN THE MATTER WAS CARRIED BEFORE THE FIRST APP ELLATE AUTHORITY, THE LD.CIT(A) HAS FOLLOWED THE ORDER OF THE TRIBUNA L FOR A.Y.2003-04 AND DELETED THE ADDITION. 10. HAVING HEARD THE SUBMISSIONS OF BOTH THE SIDES, THIS ISSUE ALSO STOOD DECIDED BY THE ORDER OF THE TRIBUNAL REPORTED AS 310 ITR 325 (SUPRA), WHEREIN IT WAS HELD AS UNDER:- HELD, (I) THAT THE POLICY OF ACCOUNTING THE INTER EST INCOME WAS REVIEWED BECAUSE THE ASSESSEE WAS SUBJECT TO TAX UN DER THE PROVISIONS OF THE INCOME-TAX ACT. THE RESOLUTIONS BEING PASSED SUBSEQUENT TO THE PASSING OF THE FINANCE ACT, 2002 BY ITSELF COULD NOT BE A GROUND FOR APPLYING THE PROVISIONS OF SECT ION 145(3) READ WITH SECTION 145(1) OF THE ACT TO BRING TO TAX, INT EREST INCOME PERTAINING TO THE PERIOD PRIOR TO THE FINANCIAL YEA R 2002-03 BUT ACTUALLY RECEIVED DURING THE YEAR. THE INCOME OF T HE ASSESSEE WAS CHARGEABLE TO TAX FROM THE ASSESSMENT YEAR AND THE INTEREST INCOME ITA NOS.2928/AHD/08,4457/AHD/07 (REVENUE) & 2810/AHD/08, 4452/AHD/07(ASSESSEE) ACIT VS. NDDB AYS 2004-05 & 2005-06 - 10 - WAS TO BE ASSESSED FOLLOWING THE MERCANTILE SYSTEM OF ACCOUNTING. THE INCOME THAT HAD ACCRUED IN THE EARLIER YEAR WHE N THE ASSESSEE WAS A NON-TAXABLE ENTITY COULD NOT BE ASSESSED IN T HE YEAR UNDER CONSIDERATION MERELY BECAUSE IT HAD BEEN RECEIVED I N THAT YEAR. IN THE CIRCUMSTANCES, THE ADDITION MADE BY THE ASSESSI NG OFFICER WAS TO BE DELETED. 10. IT IS WORTH TO NOTE THAT THE REVENUE DEPARTMENT HAD GONE IN APPEAL BEFORE THE HONBLE GUJARAT HIGH COURT AND VI DE TAX APPEAL NO.672 OF 2008 ORDER DATED 22/12/2008( SUPRA) T HE SAID GROUND WAS DISMISSED VIDE FOLLOWING OBSERVATION:- 5. AS CAN BE SEEN FROM THE FACTS WHICH ARE NOT IN DISPUTE, THE RESPONDENT-ASSESSEE WAS NOT LIABLE TO BE TAXED UPTO 31.3.2002 AND BECAME TAXABLE ONLY FOR THE INCOME EARNED DURING TH E PERIOD 1.4.2002 TO 31.3.2003. IN CONTEXT OF THIS POSITION, THE TRIBUNAL HAS FOUND AS A MATTER OF FACT THAT THE CHANGE IN THE ME THOD OF ACCOUNTING IS BONA FIDE, THE CHANGE HAS BEEN UNDERT AKEN IN CONSONANCE WITH THE ACCOUNTING STANDARDS PRESCRIBED BY THE INSTITUTE OF CHARTERED ACCOUNTANTS ON THE ADVICE OF THE TAX CONSULTANT OF THE ASSESSEE. THE SAID FACT THAT THE CHANGE IN METHOD OF ACCOUNTING IS IN LINE WITH THE PRESCRIBED ACCOUN TING STANDARD HAS ALSO BEEN ACCEPTED BY THE ASSESSING OFFICER. TH E ASSESSEE HAS, CONSISTENTLY FROM THE PRECEDING YEAR, PRECEDING TO THE YEAR UNDER CONSIDERATION, AND IN ALL SUBSEQUENT YEARS, FOLLOWE D THE METHOD OF ACCOUNTING ADOPTED. HENCE, THE TRIBUNAL HAS COME TO THE CONCLUSION THAT IN LIGHT OF THE SETTLED LEGAL POSIT ION, CONSIDERING THE TWO RESOLUTIONS AND THE BACKGROUND NOTE RELATIN G TO THE RESOLUTIONS, IT WAS APPARENT THAT THERE WAS NO GROU ND FOR APPLYING PROVISIONS OF SECTION 145(3) READ WITH SECTION 145( 1) OF THE ACT TO BRING THE INTEREST INCOME TO TAX PERTAINING TO PERI OD PRIOR TO FINANCIAL YEAR 2002-03. THAT THOUGH THE INCOME IN Q UESTION MIGHT HAVE BEEN RECEIVED DURING THE YEAR UNDER CONSIDERAT ION, IT WAS NOT CORRECT TO STATE THAT THE SAME WOULD ESCAPE TAX AS THE SAME WAS ADMITTEDLY INCOME OF THE EARLIER YEAR AND THE ASSES SEE WAS NOT LIABLE TO TAX BY VIRTUE OF SECTION 44 OF THE ACT, AS IT TH EN STOOD. ITA NOS.2928/AHD/08,4457/AHD/07 (REVENUE) & 2810/AHD/08, 4452/AHD/07(ASSESSEE) ACIT VS. NDDB AYS 2004-05 & 2005-06 - 11 - 6. IN LIGHT OF THE AFORESAID FINDINGS RECORDED BY T HE TRIBUNAL, IT IS APPARENT THAT THE TRIBUNAL HAS RECORDED FINDINGS OF FACT AFTER APPRECIATING THE EVIDENCE ON RECORD. WHETHER A CHAN GE IN THE METHOD OF ACCOUNTING IS BONA FIDE OR NOT HAS TO BE EXAMINED IN LIGHT OF THE FACTS AND EVIDENCE ON RECORD AND THE TRIBUNA L HAS APPLIED THE CORRECT PRINCIPLES LAID DOWN BY THIS COURT TO THE F ACTS FOUND. THE TRIBUNAL IS JUSTIFIED IN HOLDING THAT THE ACTION OF RESPONDENT-ASSESSEE IN CHANGING THE METHOD OF ACCOUNTING WITH EFFECT FR OM 1.4.2001 CANNOT BE READ TO MEAN THAT THE ACT WAS MALA FIDE B ECAUSE FOR THE SAID PERIOD, ADMITTEDLY, THE ASSESSEE WAS NOT LIABL E TO TAX. THE CONTENTION OF THE REVENUE THAT FOR THE VERY SAME RE ASON, THE CHANGE IN METHOD OF ACCOUNTING WAS REQUIRED TO BE IGNORED, NAMELY, HAVING BEEN EFFECTED FROM 1.4.2001, IS LOOKING AT THE ISSU E IN A MANNER WHICH CAN BE TERMED TO BE ONE WHICH NO REASONABLE P ERSON WOULD CONSIDER. ONCE THE FACT IS ADMITTED THAT FOR THE SA ID PERIOD, THE ASSESSEE WAS NOT LIABLE TO TAX, TO SAY THAT THE ASS ESSEE SHOULD NOT HAVE CHANGED THE METHOD OF ACCOUNTING FOR THE SAID PERIOD IS IGNORING THE OBVIOUS, NAMELY, THE CHANGE IS BASED O N THE ADVICE RECEIVED FROM THE CONSULTANT TO ADOPT THE PRESCRIBE D ACCOUNTING STANDARDS. IT WAS ONLY INCIDENTAL THAT THE CHANGE W AS EFFECTED AT A POINT OF TIME WHEN PROVISIONS OF SECTION 44 OF THE ACT CAME TO BE OMITTED FROM THE STATUTE. THEREFORE, INSOFAR AS PRO POSED QUESTION NO. 1 IS CONCERNED, NO QUESTION OF LAW ARISES. 10.1. AS NOTED ABOVE, SLP HAS ALSO BEEN DISMISSED B Y THE HONBLE APEX COURT. EVEN IN A.Y. 2006-07 ITAT B BENCH IN ASSESSEES OWN CASE VIDE AN ORDER DATED 25/05/2011 HAS DISMISSED THAT V ERY GROUND OF THE REVENUE. RESPECTFULLY FOLLOWING THE VIEW TAKEN BY THE HON BLE COURTS WE FIND NO FORCE IN THE GROUNDS OF THE REVENUE FOR BOTH THE YEARS AND DISMISS THE SAME. [B] ASSESSEES APPEALS : 11. ITA NO.4452/AHD/2007 & 2810/AHD/2008 F OR A.YS. 2004-05 AND 2005-06 RESPECTIVELY. ITA NOS.2928/AHD/08,4457/AHD/07 (REVENUE) & 2810/AHD/08, 4452/AHD/07(ASSESSEE) ACIT VS. NDDB AYS 2004-05 & 2005-06 - 12 - IN ITA NO.4452/AHD/2007, ASSESSEE RAISED THE FOLL OWING GROUNDS: 1. THE ORDER PASSED BY THE COMMISSIONER OF INCOME TA X (APPEALS) IS ERRONEOUS AND CONTRARY TO THE PROVISIO NS OF LAW AND FACTS AND THEREFORE REQUIRES TO BE SUITABLY MOD IFIED. IT IS SUBMITTED THAT IT BE SO DONE NOW. 2. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HA S ERRED IN CONFIRMING ADDITION INTEREST INCOME EARNED ON A PROJECT FUND AMOUNTING TO RS.1,22,05,405/- AS INCOME OF THE APPE LLANT. IT IS SUBMITTED THAT IN THE FACTS AND CIRCUMSTANCES OF TH E CASE, THE APPELLANT IS ACTING AS A NODAL AGENCY AND INCOME IS DIVERTED AT SOURCE AND NOT BELONGING TO THE APPELLANT. IT BE S O HELD NOW. 2.1. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) FA ILED TO APPRECIATE THAT EXPENDITURE HAS BEEN MADE OUT OF TH E SAID INCOME AND THEREFORE, IF THE INTEREST RECEIVED IS T REATED AS INCOME CHARGEABLE TO TAX THEN SIMILARLY EXPENDITURE INCURRED THEREFROM HAS TO BE ALLOWED AS DEDUCTION. IT BE SO DONE NOW. 11.1 THROUGH AN ADDITIONAL GROUND FOR A.Y. 2005-0 6 THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: 1. THE LEARNED ASSESSING OFFICER & LEARNED CIT(A) HAS ERRED IN TAXING INTEREST EARNED ON NORTH KERALA PROJECT DEVELOPMENT FUND, AMOUNTING TO RS.1,16,92,827/- AS INCOME OF THE APPELLANT. IT IS SUBMITTED THAT IN THE FACT S AND CIRCUMSTANCES OF THE CASE, THE APPELLANT IS ACTING AS A NODAL AGENCY AND INCOME IS DIVERTED AT SOURCE AND DOES NO T BELONG TO THE APPELLANT. 1.1. WITHOUT PREJUDICE TO ABOVE, IF THE INTEREST IS CONSIDERED AS INCOME OF THE ASSESSEE, DIRECTION BE GIVEN TO ALLOW THE EXPENDITURE IN THE SAME YEAR IN WHICH THEY ARE INCU RRED AS DEDUCTION. IT BE SO DONE NOW. ITA NOS.2928/AHD/08,4457/AHD/07 (REVENUE) & 2810/AHD/08, 4452/AHD/07(ASSESSEE) ACIT VS. NDDB AYS 2004-05 & 2005-06 - 13 - 11.2 GROUND NO.1 IS GENERAL IN NATURE NEEDS NO INDE PENDENT ADJUDICATION. 12. WHILE DECIDING THE APPEAL OF THE ASSESSEE FOR A .Y. 2003-04, REPORTED AS 310 ITR (AT) 375 [AHD.] VIDE PLACITUM 2 9 THE RESPECTED CO- ORDINATE BENCH HAS HELD THAT INTEREST HAD ACCRUED T O THE ASSESSEE. BEING CONSISTENT WITH THE SAID VIEW GROUND NOS.2 & 2.1 AN D THE ADDITIONAL GROUNDS OF THE ASSESSEE ARE HEREBY DISMISSED. 13. GROUND NO.3, 3.1 & 3.2 READS AS UNDER:- (A.Y. 04-05 ASSESSEES APPEAL) 3. THE LEARNED COMMISSIONER OF INCOME-TAX HAS ERRED I N CONFIRMING DISALLOWANCE OF GRANT OF RS.4,99,82,283 (FOR A.Y. 2005-06 OF RS.16,21,47,646/-) GIVEN TO VARIOUS COOP ERATIVE SOCIETIES AS DEDUCTIBLE EXPENDITURE U/S.36(1`)(XII) OF THE I.T. ACT ON THE GROUND THAT THE SAME ARE NOT IN THE NATURE O F EXPENDITURE. APPELLANT SUBMITS THAT THE GRANT GIVE N WERE IN THE NATURE OF EXPENDITURE AND ALLOWABLE IN ACCORDANCE W ITH SECTION 36(1)(XII) OF THE I.T. ACT. IT IS SUBMITTED THAT I T BE SO HELD NOW. 3.1. THE LEARNED COMMISSIONER OF INCOME-TAX HAS ERRED IN NOT APPRECIATING THE FACT THAT EXPENDITURE IS BOOKED ON LY WHEN ADVANCE GIVEN ARE UTILIZED AND THEREFORE THERE IS N O QUESTION OF POSSIBLE CONVERSION IN SUCH CASES AND HENCE THE CLAIM MADE OUGHT TO HAVE BEEN ALLOWED. IT BE SO HELD NOW . 3.2. IN NAY EVENT THE SAME IS ALLOWABLE U/S.37/28 OF THE I.T. ACT AND THEREFORE, THE SAME OUGHT TO HAVE BEEN ALLOWED AS DEDUCTION. IT BE SO HELD NOW. 14. AFTER THE RECALL OF THE ORDER FOR A.Y. 2003-04 AN ANOTHER ORDER WAS PASSED BY ITAT B BENCH AHMEDABAD BEARING ITA NO.4 54/AHD/2006 ITA NOS.2928/AHD/08,4457/AHD/07 (REVENUE) & 2810/AHD/08, 4452/AHD/07(ASSESSEE) ACIT VS. NDDB AYS 2004-05 & 2005-06 - 14 - ORDER DATED 21/04/2011 AND THE MATTER WAS RESTORED TO THE FILE OF THE AO. LIKEWISE, FOR A.Y. 2006-07 ITAT B BENCH IN ITA NO .3328/AHD/2009 VIDE AN ORDER DATED 07/06/2011 HAS FOLLOWED A.Y. 20 03-04 AND RESTORED THE MATTER TO THE FILE OF THE AO. IT IS WORTH TO MENTION THAT A DECISION OF ITAT DELHI E BENCH PRONOUNCED IN THE CASE OF OIL INDUSTRY DEVELOPMENT BOARD REPORTED IN (2009) 31 SOT 226 (DE LHI) HAS BEEN FOLLOWED FOR THE PROPOSITION THAT EXPENDITURE INCUR RED BY WAY OF DISBURSEMENT OF GRANT FOR THE OBJECTION PURPOSES WO ULD BE ALLOWABLE AS DEDUCTION U/S.36 (1)(XII) OF THE ACT. THE NON-REF UNDABLE GRANTS SANCTIONED NEEDS VERIFICATION AT THE END OF THE AO AS DIRECTED BY THE RESPECTED BENCH FOLLOWING THE PAST HISTORY. FOLLOW ING THE PAST HISTORY A CONSISTENT VIEW TAKEN FOR THIS YEAR AS WELL AND GRO UNDS ARE RESTORED FOR DE NOVO CONSIDERATION, THEREFORE DEEMED TO BE ALLOWED BUT FOR STATISTICAL PURPOSES. 15. GROUND NO.4 1. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN CONFIRMING DISALLOWANCE OF RS.2,39,924/- BEING C ONTRIBUTION MADE TO EMPLOYEES RECREATION TRUST BY INVOKING PRO VISIONS OF SECTION 40A(9) OF THE I.T. ACT. IT IS SUBMITTED TH AT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, SECTION 40A(9) IS NO T APPLICABLE AND NO DISALLOWANCE WAS REQUIRED TO BE MADE. IT IS SUBMITTED THAT IT BE SO HELD NOW. 15.1) FOR A.Y. 2005-06, AN ADDITIONAL GROUND WAS RA ISED IN THIS REGARD CHALLENGING THE DISALLOWANCE OF RS.4,75,394/-. FO R BOTH THE YEARS, WE HEREBY HOLD THAT THE TRIBUNAL HAS TAKEN A VIEW IN A .Y. 2003-04 (310 ITR 325)[AT] IN FAVOUR OF THE REVENUE AND HELD THAT THE PROVISIONS OF SECTION 40A(9) ARE VERY CLEAR IN PROVIDING THAT ANY PAYMENT OR CONTRIBUTION MADE BY AN EMPLOYER ON BEHALF OF THE EMPLOYEES TO ANY FU ND, TRUST WOULD NOT ITA NOS.2928/AHD/08,4457/AHD/07 (REVENUE) & 2810/AHD/08, 4452/AHD/07(ASSESSEE) ACIT VS. NDDB AYS 2004-05 & 2005-06 - 15 - BE AN ALLOWABLE EXPENSES EXCEPT THE PAYMENT IS MADE FOR EXPENSES PROVIDED U/S.36(1)(IV) AND (V). TAKING A CONSISTEN T VIEW THE ADDITION IS HEREBY CONFIRMED AND THIS GROUND OF THE ASSESSEE IS DISMISSED. 16. REST OF THE GROUNDS ARE EITHER IN GENERAL OR C ONSEQUENCE IN NATURE. RESULTANTLY, FOR A.Y. 2004-05 APPEAL OF THE ASSESSE E IS DISMISSED EXCEPT ONE GROUND WHICH IS RESTORED BACK FOR RECONSIDERATI ON. [B] IN ITA NO.2810/AHD/2008 (A.Y. 05-06), ASSESSE E RAISED THE FOLLOWING GROUNDS: 17. FOR A.Y. 2005-06 REMAINING GROUNDS LEFT FOR OUR ADJUDICATION ARE TO BE DEALT WITH AS FOLLOWS. 18. GROUNDS NOS. ARE 2, 2.1,2.2 & 2.3, HOWEVER A SUBSTANTIAL QUESTION IS AS PER GROUND NO.2 IS REPRODUCED BELOW. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) H AS ERRED IN DISALLOWING THE APPELLANT CLAIM FOR DEDUCTION U/S.3 6(1)(VIII) RS.4,02,06,000. IT IS SUBMITTED THAT APPELLANT HAS SATISFIED NECESSARY CONDITIONS AND LEARNED CIT(A) OUGHT TO HA VE ALLOWED THE DEDUCTION AS CLAIMED. IT IS SUBMITTED THAT IT BE SO HELD NOW. 2.1 THE LEARNED COMMISSIONER OF INCOME TAX (APPE ALS) HAS ERRED IN UPHOLDING THAT PRODUCING MILK AND MILK PRO DUCTS IS NOT AN INDUSTRY BY RELYING ON THE FINDING OF HONO RABLE ITAT THAT MEANING OF INDUSTRY UNDER THE INDUSTRIA L DEVELOPMENT & REGULATION ACT CANNOT BE IMPORTED UND ER THE INCOME TAX ACT TO GRANT BENEFIT U/S.36(1)(VIII). I T IS SUBMITTED ITA NOS.2928/AHD/08,4457/AHD/07 (REVENUE) & 2810/AHD/08, 4452/AHD/07(ASSESSEE) ACIT VS. NDDB AYS 2004-05 & 2005-06 - 16 - THAT PRODUCTION OF MILK AND MILK PRODUCTS IS CONSID ERED AS AN INDUSTRY UNDER THE INCOME TAX ACT ITSELF IN NOTIF ICATION NO.SO627(E) DATED 4-8-1999 ISSUED BY THE CENTRAL BO ARD OF DIRECT TAXES (CBDT) AND ACCORDINGLY ENTITLED TO ALL OWANCE U/S.36(1)(VIII). IT IS SUBMITTED THAT IT BE SO HEL D NOW. 19. FOR A.Y.2003-04 (310 ITR 325)[AT] THE ISSUE WAS DECIDED AGAINST THE ASSESSEE AND IT WAS HELD THAT THE CONDITIONS PR ESCRIBED U/S.36(1)(VIII) WERE NOT COMPLIED WITH BY THE ASSESSEE. LIKEWISE , FOR A.Y. 2006-07 VIDE ORDER DATED 7/6/2011 THAT VIEW OF THE TRIBUNAL WAS FOLLOWED AND DECIDED AGAINST THE ASSESSEE. CONSISTENT WITH THE ORDERS OF THE TRIBUNAL FOR THE YEAR AS WELL THIS GROUND IS HEREBY DISMISSE D. 20. WE ARE ALSO LEFT WITH GROUND NO.4 FOR A.Y. 2005 -06; REPRODUCED BELOW:- 4. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE DEPRECIATION AS COMPUTED BY THE AO I N VIEW OF THE RETROSPECTIVE AMENDMENT TO SECTION 43(6) OF THE ACT . IT IS SUBMITTED THAT THE DEPRECIATION COMPUTED BY AO IS N OT AS PER THE AMENDMENT MADE TO SECTION4 3(6) AND THE CIT(A) OUGH T TO HAVE DIRECTED THE AO TO COMPUTE DEPRECIATION CONSIDERING THE AMENDMENT IN PROPER PERSPECTIVE. IT IS SUBMITTED T HAT IT BE SO HELD NOW. 21. FOR A.Y. 2005-06, THE ASSESSEE HAS ALSO RAISED AN ADDITIONAL GROUND; REPRODUCED BELOW:- ITA NOS.2928/AHD/08,4457/AHD/07 (REVENUE) & 2810/AHD/08, 4452/AHD/07(ASSESSEE) ACIT VS. NDDB AYS 2004-05 & 2005-06 - 17 - THE LEARNED ASSESSING OFFICER & LEARNED CIT(A) HAVE ERRED IN NOT GRANTING DEPRECIATION ON THE CLOSING WRITTEN DOWN V ALUE OF THE BLOCK OF ASSETS FOR THE A.Y. 2004-05. 22. WHILE DECIDING THE APPEAL OF THE REVENUE HEREIN ABOVE, WE HAVE ALREADY TAKEN A VIEW IN FAVOUR OF THE ASSESSEE AND HELD THAT THE NOTIONAL DEPRECIATION COULD NOT BE REDUCED. ACCORDINGLY, FO R THIS YEAR THESE GROUNDS ARE ALLOWED AND IN CONSEQUENCE THEREUPON TH E ADDITIONAL GROUND SURVIVES SO THAT THE CORRECT WDV AS PER LAW SHOULD BE RECOMPUTED. ISSUE RAISED BY THE ASSESSEE IS HEREBY ALLOWED. GR OUND IS ALLOWED. 23. REST OF THE GROUNDS ARE EITHER IN GENERAL OR C ONSEQUENTIAL NEED NO INDEPENDENT ADJUDICATION. 24. IN THE RESULT, FOR A.YS. 2004-05 & 2005-06 REVE NUES APPEAL ARE DISMISSED AND ASSESSEES APPEAL ARE PARTLY ALLOWED BUT FOR STATISTICAL PURPOSES. SD/- SD/- ( .. !' ) ( ) #$ ( B.P. JAIN ) ( MUKUL KR. SHRAWAT ) ACCOUNTANT MEMBER JUDICIAL ME MBER AHMEDABAD; DATED 31 / 01 /2012 .(..', .'../ T.C. NAIR, SR. PS ITA NOS.2928/AHD/08,4457/AHD/07 (REVENUE) & 2810/AHD/08, 4452/AHD/07(ASSESSEE) ACIT VS. NDDB AYS 2004-05 & 2005-06 - 18 - #- ' /0 1#0, #- ' /0 1#0, #- ' /0 1#0, #- ' /0 1#0,/ COPY OF THE ORDER FORWARDED TO : 1. 23 / THE APPELLANT 2. /423 / THE RESPONDENT. 3. 5 / CONCERNED CIT 4. 5() / THE CIT(A)-IV, BARODA 5. 089 /' , , / DR, ITAT, AHMEDABAD 6. 9: ;& / GUARD FILE. #-' #-' #-' #-' / BY ORDER, 40 / //TRUE COPY// < <<