ACIT, Pondicherry V. M/s. Chemfab Alkalis Ltd., Pondicherry

ITA 563/CHNY/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 64178 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-08-2012
• Appeal Filed By: Department
• Bench Allotted: A
• Next Hearing Date: 05-07-2012
• Assessment Year: 2003-2004
• Appeal Filed On: 16-03-2012
• Court: TRIBUNAL
• Assessee Lawyers: J CHANDRASEKARAN
• Keywords: Capital asset; Depreciation; Capital receipt
• Section: 143(3); 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH CHENNAI BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER AND SHRI V. DURGA RAO, JUDICIAL MEMBER .. ITA NO.563/MDS/2012 ASSESSMENT YEAR: 2003-04 THE ASST. COMMISSIONER OF INCOME-TAX, CIRCLE-I, PONDICHERRY. V. M/S. CHEMFAB ALKALIS LTD., GNANANDA PLACE, KALAPET, PONDICHERRY. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SHAJI P. JACOB, ADDL. CIT RESPONDENT BY : SHRI J. CHANDRASEKARAN, CA DATE OF HEARING : 05.07.2012 DATE OF PRONOUNCEMENT : 24.0 8.2012 O R D E R PER V. DURGA RAO, JUDICIAL MEMBER : THIS APPEAL BY THE REVENUE FOR THE ASSESSMENT YEAR 2003-04 IS AGAINST THE ORDER PASSED BY THE CIT(A)-X II, CHENNAI, DATED 19-12-2011. 2. GROUNDS 1, 2 AND 3 RELATE TO THE SAME ISSUE REGA RDING TAX COMPUTATION U/S 115JB OF THE INCOME TAX ACT, 1961 ( THE ACT FOR SHORT). ITA.563/MDS/2012 2 3. FACTS IN BRIEF ARE THAT THE ASSESSEE FILED I TS RETURN OF INCOME DECLARING TOTAL INCOME AT NIL UNDER REGULA R PROVISIONS AND RS.1,22,87,684/- U/S 115JB OF THE ACT. THE AO C OMPLETED THE ASSESSMENT U/S 143(3) BY ASSESSING THE INCOME A T NIL UNDER THE RELEVANT PROVISIONS AND RS. 1,34,45,.470/ - UNDER SECTION 115JB OF THE ACT. 4. SUBSEQUENTLY, THE AO NOTICED THAT THE ASS ESSEE DURING THE FINANCIAL YEAR 2002-03 RECEIVED AN INSURANCE CL AIM OF RS. 1,54,93,244/- AND THE ASSESSEE DIRECTLY CREDITED TO THE BALANCE SHEET WITHOUT CREDITING TO THE PROFIT & LOSS ACCOUN T. 5. AS PER THE COMPANIES ACT, 1956 THE ASSESSEE COM PANY HAS TO CLAIM ANY LOSS ARRIVING OUT OF CAPITAL ASSET S IN THE PROFIT & LOSS ACCOUNT. ACCORDINGLY, LOSS ON SALE OF ASSET (OR) LOSS ON ASSETS DISCARDED (OR) THEFT ON LOSS OF AN ASSET IS WRITTEN OFF IN THE P&L ACCOUNT PREPARED IN ACCORDANCE WITH THE PRO VISIONS OF PART-II AND III OF SCHEDULE VI OF THE COMPANIES ACT , 1956 AND ACCORDINGLY ANY CLAIM OF INSURANCE RECEIVED ON BEHA LF OF THE ASSET ALSO HAS TO BE CREDITED AS INCOME IN THE P& L A/C. WHEREAS, THE ASSESSEE-COMPANY HAS DIRECTLY CREDITED THE INSURANCE RECEIVED IN THE CAPITAL RESERVE. HAD THE INSURANCE CLAIM BEEN CREDITED IN THE INCOME SIDE OF THE P&L A /C, THE ITA.563/MDS/2012 3 BOOK PROFIT WOULD HAVE BEEN INCREASED BY A LIKE AMOU NT AND ACCORDINGLY, THE TAX PAYABLE COULD HAVE BEEN HIGHER U/S 115JB OF THE ACT. THE NON-CREDITING OF INSURANCE RECEIPT IN THE P&L ACCOUNT IS NOT IN ACCORDANCE WITH THE PROVISIONS OF THE COMPANIES ACT. HENCE, THE AMOUNT OF INSURANCE OF ` 1,54,93,244/- HAS TO BE CREDITED IN THE BOOK PROFIT FOR TAX U/S 115JB OF THE ACT. ACCORDINGLY, THE ASSESSING OFFICE R HAS COMPUTED THE INCOME OF THE ASSESSEE BY TAKING INTO CONSIDERATION THE AMOUNT OF ` 1,54,93,244/- BY ADJUSTING AS PER SEC. 115JB OF THE ACT. 6. FURTHER THE AO HAS OBSERVED THAT THE AMOUNT O F ` 1,54,93,244/- RECEIVED AS INSURANCE CLAIM IS TAXABL E U/S 45(1A) OF THE ACT AS INCOME FROM CAPITAL GAINS FOR THE PURPOSE OF SEC. 43 VALUE OF ANY MONEY RECEIVED SHOULD BE DE EMED TO BE THE FULL VALUE OF CONSIDERATION RECEIVED ON ACCR UING AS A RESULT OF SUCH TRANSFER. HENCE THE AMOUNT OF ` 1,54,93,244/- IS TREATED AS SHORT TERM CAPITAL GAIN. 7. ON BEING AGGRIEVED, THE ASSESSEE CARRIED THE MA TTER BEFORE THE CIT(A). IT WAS SUBMITTED BEFORE THE LE ARNED CIT(A) THAT THE AO HAS NO POWER TO MAKE AN ADJUSTME NT UNDER SEC. 115JB OF THE ACT. FOR THAT THE ASSESSEE HAS RELIED ITA.563/MDS/2012 4 ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF APOLLO TYRES LTD. V. CIT (255 ITR 273) AND ALSO SOM E OTHER JUDGMENTS. THE LEARNED CIT(APPEALS) AFTER CONSIDER ING THE SUBMISSIONS OF THE ASSESSEE OBSERVED THAT THE AO WA S NOT JUSTIFIED IN INVOKING THE PROVISIONS OF SEC. 115JB(2 ) OF THE ACT AND ADDING THE INSURANCE CLAIM OF ` 1,54,93,244/- RECEIVED TO THE BOOK PROFIT BY FOLLOWING THE DECISION OF THE HO N'BLE SUPREME COURT IN THE CASE OF APOLLO TYRES LTD. (SUP RA). 8. INSOFAR AS THE SHORT TERM CAPITAL GAIN IS CONCER NED, THE LEARNED CIT(APPEALS) HAS HELD THAT SUB-SECTION (1A) OF SECTION 45 RECOGNIZES THE INSURANCE CLAIM AS A CONSIDERATIO N FOR THE CAPITAL ASSET AND ACCORDINGLY TAXABLE UNDER THE HEA D CAPITAL GAINS. A COMBINED READING OF SECTION 45(1A) AND S ECTION 50 OF THE ACT CLEARLY PROVIDES FOR TAXING THE INSURANC E CLAIM RECEIVED ON ACCOUNT OF DEPRECIABLE ASSETS AS A SHOR T TERM CAPITAL GAIN. THEREFORE, AS PER THE PROVISIONS OF SEC. 50, SINCE THE BLOCK OF ASSETS AFTER REDUCING THE INSURANCE CL AIM RECEIVED IS STILL CONTINUING WITH A POSITIVE VALUE, THERE WI LL NOT BE ANY CAPITAL GAINS TO BE TAXED IN THIS YEAR. THE LEARNE D CIT(APPEALS) HELD THAT THE ASSESSEE IS ENTITLED TO DEPRECIATION ON THE WDV SO REDUCED BY THE VALUE OF THE INSURANCE CLAIM ITA.563/MDS/2012 5 RECEIVED DURING THE YEAR. HE HELD THAT THE ASSESSE E HAS RIGHTLY REDUCED THE INSURANCE CLAIM RECEIVED OF ` 1,54,93,244/- FROM THE OPENING WDV AS ON 01-04-2002 OF ` 9,00,33,053/- AND HENCE THE ACTION OF THE ASSESSING OFFICER TAXIN G THE INSURANCE CLAIM RECEIVED OF ` 1,54,93,244/- IS NOT AS PER LAW AND THE GROUND RAISED BY THE ASSESSEE WAS ALLOWED. 9. ON BEING AGGRIEVED, THE REVENUE CARRIED THE MA TTER BEFORE THE TRIBUNAL. 10. THE LEARNED DR HAS SUBMITTED THAT WHEN THERE IS A LOSS OF AN ASSET, THE SAME IS TO BE ROUTED THROUGH THE P ROFIT & LOSS ACCOUNT. WHEN THE ASSESSEE HAS RECEIVED THE INSURA NCE CLAIM, IT HAS BEEN DIRECTLY CREDITED TO THE CAPITAL ACCOUN T WHICH IS CONTRARY TO PART II AND PART III OF SCHEDULE VI OF THE COMPANIES ACT. HE STRONGLY RELIED ON THE DECISION OF THE TRIBUNAL IN THE CASE OF DCIT V. BOMBAY DIAMOND CO. L TD. (2010) 33 DTR (MUMBAI) (TRIB) 59 AND IN THE CASE OF M/S. SUMER BUILDERS PVT. LTD. (2012-TIOL-183-ITAT-MUM) AS ALSO THE DECISION OF THE HON'BLE CALCUTTA HIGH COURT IN THE CASE OF GKW LTD. V. CIT ((12011) 200 TAXMAN 396 (CAL). THE LEARNED DR FURTHER SUBMITTED THAT THE LEARNED CIT(APPEALS) ALLOWED THE GROUND RAISED BY THE ASSESSEE BY FOLLOWING THE DECISION IN ITA.563/MDS/2012 6 THE CASE OF APOLLO TYRES LTD. (SUPRA) WHICH HAS NO APPLICATION TO THE FACTS OF THE CASE. ACCORDING TO SECTION 115 JB OF THE ACT THE ASSESSING OFFICER HAS EVERY POWER TO GO BEYOND THE BOOK PROFIT, IF THE ACCOUNTS ARE NOT PREPARED IN THE MAN NER PROVIDED BY PART II & PART III OF SCHEDULE IV OF THE COMPANI ES ACT, 1956. 11. ON THE OTHER HAND, THE LEARNED COUNSEL FOR TH E ASSESSEE STRONGLY RELIED ON THE ORDER PASSED BY THE LEARNED CIT(APPEALS). HE FURTHER SUBMITTED THAT AS PER PA GES 71 & 75 OF THE PAPER BOOK FILED BEFORE US, THE AMOUNT RE CEIVED REPRESENTED ONLY FOR REPLACEMENT OF THE CAPITAL ASS ET. THEREFORE THE SAME NEED NOT NECESSARILY BE ROUTED T HROUGH THE PROFIT & LOSS ACCOUNT. HE STRONGLY RELIED ON T HE FOLLOWING DECISIONS : 1. HONBLE SUPREME COURT IN THE CASE OF APOLLO TYRES LTD. V. CIT (255 ITR 273 ) (SC); 2. TRIBUNAL CHENNAI BENCH C IN THE CASE OF TIDEL PARK V. ACIT (ITA NO. 750/MDS/2 007 DT. 08-08-2008; 3. TRIBUNAL P BENCH, MUMBAI IN THE CASE OF ACIT V. VIJAY FURNITURE MFG. CO. PVT. LTD. 4. CIT V. AKSHAY TEXTILE TRADING & AGENCI ES PVT. LTD. (304 ITR 401) (BOM); 5. KINETIC MOTOR CO. LTD. V. DCIT (262 IT R 330) (MUM); 6. SPECIAL BENCH OF THE TRIBUNAL IN THE C ASE OF SUTLEJ COTTON MILLS V. ACIT (45 ITD 22) (CAL) (SB) AND ITA.563/MDS/2012 7 7. CIT V. TAMILNADU MERCANTILE BANK LTD. (2 55 ITR 205) 12. WE HAVE HEARD BOTH THE SIDES, PERUSED THE RECO RDS AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELO W. THERE WAS A FIRE ACCIDENT IN THE ASSESSEES PREMISES IN W HICH CERTAIN PLANT AND MACHINERY IS DESTROYED. THE LOSS OCCURRE D ON ACCOUNT OF THE FIRE ACCIDENT IS ROUTED THROUGH THE PROFIT & LOSS ACCOUNT. WHEN THE ASSESSEE RECEIVED THE INSURANCE CLAIM TO THE TUNE OF ` 1,54,93,244/-, WHICH THE ASSESSEE HAS NOT CREDITED TO THE PROFIT & LOSS ACCOUNT, THE ASSESSE E HAS TREATED THE SAME AS CAPITAL RECEIPT AND DIRECTLY CR EDITED TO THE CAPITAL RESERVE IN THE BALANCE SHEET. THE CASE OF T HE ASSESSING OFFICER IS THAT AS PER PART II AND III OF SCHEDULE VI OF THE COMPANIES ACT, 1956 THE ASSESSEE COMPANY HAS TO CLAIM ANY LOSS ARRIVING OUT OF CAPITAL ASSET IN THE PROFIT & LOSS ACCOUNT. ACCORDINGLY ANY CLAIM OF INSURANCE ON BEH ALF OF THE ASSET ALSO HAS TO BE CREDITED AS AN INCOME IN THE P ROFIT & LOSS ACCOUNT. WHEREAS THE ASSESSEE-COMPANY HAS DIRECTLY CREDITED THE INSURANCE CLAIM RECEIVED TO THE CAPITAL RESERVE . ACCORDING TO THE ASSESSING OFFICER, THE ACCOUNTING TREATMENT GIVEN BY THE ASSESSEE IS NOT IN ACCORDANCE WITH THE PROVISIONS ITA.563/MDS/2012 8 OF THE COMPANIES ACT. ACCORDINGLY, THE AMOUNT OF I NSURANCE CLAIM RECEIVED AMOUNTING TO ` 1,54,93,244/- SHOULD BE CREDITED TO THE PROFIT & LOSS ACCOUNT AND TAXED U/S 115JB OF THE ACT. THE LEARNED CIT(APPEALS) BY FOLLOWING THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF APOLLO TYR ES LTD. (SUPRA) HAS HELD THAT FOR THE PURPOSE OF BOOK PROFI TS THE ONLY ADJUSTMENTS THAT ARE PERMITTED ARE THOSE PRESCRIBED IN THE PROVISION. THE ASSESSING OFFICER CANNOT TRAVEL BEY OND THE PROVISIONS OF THE SAID EXPLANATION. THEREFORE, THE INSURANCE CLAIM DIRECTLY CREDITED TO THE CAPITAL RESERVE IN T HE BALANCE SHEET WITHOUT ROUTING THROUGH THE PROFIT & LOSS ACC OUNT IS OUTSIDE THE PROVISIONS OF SEC. 115JB(2) OF THE ACT. THE ASSESSING OFFICER WAS NOT JUSTIFIED IN INVOKING THE PROVISIONS OF EXPLANATION TO SEC. 115JB OF THE ACT AND ADDING THE INSURANCE CLAIM OF ` 1,54,93,244/- RECEIVED TO THE BOOK PROFIT AND ALLOWED THE GROUND RAISED BY THE ASSESSEE. 13. THE ONLY POINT FOR CONSIDERATION BEFORE US IS W HETHER THE INSURANCE CLAIM RECEIVED BY THE ASSESSEE HAS TO BE ROUTED THROUGH THE PROFIT & LOSS ACCOUNT OR NOT. IN THE P RESENT CASE WHEN THE LOSS OCCURRED, THE SAME WAS ROUTED THROUGH THE PROFIT & LOSS ACCOUNT. BUT WHEN THE INSURANCE CLAIM IS ITA.563/MDS/2012 9 RECEIVED, IT IS DIRECTLY CREDITED TO THE CAPITAL RE SERVE. WHEN WE SPECIFICALLY ASKED THE LEARNED COUNSEL FOR THE ASSE SSEE WHY IT IS NOT ROUTED THROUGH THE PROFIT & LOSS ACCOUNT, HE HAS SUBMITTED THAT THE AMOUNT WAS RECEIVED ONLY FOR THE PURPOSE OF REPLACEMENT OF LOSS OF ASSET. FOR THIS HE RELIE D ON PAGES 71 & 75 OF THE PAPER BOOK. AS PER THE PAPER BOOK PAGE S 71 AND 75 IT IS ONLY THE SETTLEMENT OF CLAIM. WHEN THERE IS A LOSS, THE SAME IS ROUTED THROUGH THE PROFIT & LOSS ACCOUNT. WHEN THE CLAIM IS RECEIVED WHY A DIFFERENT TREATMENT IS GIVE N BY THE ASSESSEE IS NOT PROPERLY EXPLAINED BEFORE US. WE F IND THAT THE ASSESSEE HAS FAILED TO PREPARE THE ACCOUNTS IN THE MANNER PROVIDED AS PER PART II AND PART III OF SCHEDULE VI OF THE COMPANIES ACT, 1956. THEREFORE THE ASSESSING OFFIC ER IS JUSTIFIED IN INVOKING THE PROVISIONS OF SECTION 115 JB OF THE ACT. THE LEARNED CIT(APPEALS) WAS NOT CORRECT IN SAYING THAT THE ASSESSING OFFICER HAS WRONGLY INVOKED SEC. 115JB OF THE ACT. UNDER SIMILAR FACTS AND CIRCUMSTANCES OF THE CASE, IN THE CASE OF DY. COMMISSIONER OF INCOME TAX V. BOMBAY DIAMOND CO. LTD. (SUPRA), THE MUMBAI BENCH OF THE TRIBUNAL HAS H ELD THAT WHEN THE ACCOUNTS ARE NOT PREPARED IN ACCORDANCE WI TH PART II OF SCHEDULE VI TO THE COMPANIES ACT, THEASSESSING O FFICER HAD ITA.563/MDS/2012 10 POWER TO GO BEYOND THE BOOK PROFIT AS PER AUDITED A CCOUNTS AND THE ASSESSING OFFICER CAN RE-WORK THE BOOK PROF IT IN THE MANNER PROVIDED BY PART II OF SCHEDULE VI TO THE CO MPANIES ACT. THE MUMBAI BENCH OF THE TRIBUNAL BY DISTINGUIS HING THE DECISION IN THE CASE OF APOLLO TYRES LTD. (SUPRA) A ND KINETIC MOTOR CO. LTD. (SUPRA) CAME TO THE ABOVE CONCLUSION . IN OUR VIEW, THE ABOVE DECISIONS CLEARLY APPLY TO THE FACT S OF THE ASSESSEES CASE. 14. INSOFAR AS V. VIJAY FURNITURE MFG. CO. PVT. LTD . (SUPRA) , AKSHAY TEXTILE TRADING & AGENCIES PVT. LTD. (SUPRA) WERE CONSIDERED BY THE MUMBAI BENCH OF THE TRIBUNAL IN T HE CASE OF SUMER BUILDERS (SUPRA) AND HELD THAT THE ASSESSING O FFICER HAS POWER TO GO BEHIND THE ACCOUNTS AND SEE WHETHER THE SAME HAVE BEEN PREPARED IN ACCORDANCE WITH THE REQUIREME NTS OF PART II AND PART III OF SCHEDULE VI OF THE COMPANIE S ACT, 1956. 15. INSOFAR AS THE DECISION IN THE CASE OF TIDEL PA RK V. ACIT (SUPRA) IS CONCERNED, THE TRIBUNAL ONLY FOLLOWED TH E DECISION IN THE CASE OF APOLLO TYRES LTD. (SUPRA). THE SAME WAS CONSIDERED BY THE TRIBUNAL IN THE CASE OF BOMBAY DIA MOND CO. LTD. (SUPRA) AND DISTINGUISHED. THIS DECISION HAS THEREFORE NO APPLICATION TO THE FACTS OF THE PRESENT CASE. ITA.563/MDS/2012 11 16. INSOFAR AS THE DECISION IN THE CASE OF CIT V. T AMILNADU MERCANTILE BANK LTD. (SUPRA) IS CONCERNED, THE COMPU TATION OF INCOME UNDER THE PROVISIONS OF THE INCOME TAX ACT I S OF NO RELEVANT FOR THE PURPOSE OF DETERMINING THE EXTENT OF BENEFIT UNDER SECTION 32AB(1) OR (2) OF THE ACT. THE COMPUT ATION UNDER THE INCOME TAX ACT IS RELEVANT AFTER THE ASCE RTAINMENT OF THE AMOUNT OF THE DEPOSIT AND THE TWENTY PER CEN T OF THE PROFITS OF THE BUSINESS CALCULATED IN ACCORDANCE WI TH SEC. 32AB(3) AND THE AMOUNT TO BE ALLOWED IN THE COMPUTAT ION UNDER THE INCOME-TAX ACT IS THE LOWER OF THE TWO FI GURES AND THE DEDUCTION IS TO BE ALLOWED IN THE MANNER PROVID ED IN SECTION 32AB(1). THIS DECISION HAS NO APPLICATION T O THE FACTS OF THE PRESENT CASE. 17. THE SPECIAL BENCH DECISION OF THE TRIBUNAL IN TH E CASE OF SUTLEJ COTTON MILLS V. ACIT (SUPRA) BY CONSIDERING THE PROVISIONS OF SECTION 115J DECIDED THE ISSUE. IN T HE PRESENT CASE THE FACTS ARE ENTIRELY DIFFERENT AND THE ASSES SING OFFICER HAS INVOKED THE PROVISIONS OF SECTION 115JB OF THE A CT. THEREFORE, THIS DECISION IS NOT APPLICABLE TO THE F ACTS OF THE PRESENT CASE. ITA.563/MDS/2012 12 18. IN THE PRESENT CASE ADMITTEDLY THE ACCOUNTS ARE NOT PREPARED IN THE MANNER PROVIDED IN PART II AND PART III OF SCHEDULE VI TO THE COMPANIES ACT, 1956. THE ASSESS EE ON ACCOUNT OF THE LOSS HAS RECEIVED THE INSURANCE CLAI M OF ` 1,54,93,244/- THE SAME HAS TO BE CREDITED TO THE PROFIT & LOASS ACCOUNT. ADMITTEDLY, IT HAS NOT BEEN DONE BY THE ASSESSEE. THEREFORE, THE ASSESSING OFFICER HAS THE POWER TO REWORK THE BOOK PROFIT BY RECASTING THE ACCOUNTS IN THE MANNER PROVIDED IN PART II AND PART III OF SCHEDULE VI TO THE COMPANIES ACT. WE THEREFORE REVERSE THE ORDER PASS ED BY THE LEARNED CIT(APPEALS) AND THE ORDER PASSED BY THE A SSESSING OFFICER IS RESTORED. IN THE CIRCUMSTANCES, THIS G ROUND RAISED BY THE REVENUE IS ALLOWED. 19. INSOFAR AS THE SHORT TERM CAPITAL GAIN IS CONCE RNED, ACCORDING TO THE ASSESSING OFFICER THE AMOUNT OF ` 1,54,93,244/- RECEIVED BY THE ASSESSEE AS INSURANCE CLAIM, THE ASSESSING OFFICER HAS TREATED THE SAME AS SHORT TER M CAPITAL GAIN AND TAXED ACCORDINGLY. THE LEARNED CIT(APPEAL S) HAS GIVEN A CATEGORICAL FINDING THAT THE ASSESSEE HAS R IGHTLY REDUCED THE INSURANCE CLAIM RECEIVED OF ` 1,54,93,244/- FROM THE OPENING WDV AS ON 1.4.2002 OF ` 9,00,33,053/- AND TAXING ITA.563/MDS/2012 13 THE INSURANCE CLAIM AS A SHORT TERM CAPITAL GAIN BY THE ASSESSING OFFICER WAS NOT IN ACCORDANCE WITH LAW. BEFORE US THE LEARNED DR SIMPLY RELIED ON THE ORDER PASSED BY THE ASSESSING OFFICER. ON THE OTHER HAND, THE LEARNED COUNSEL FOR THE ASSESSEE STRONGLY SUPPORTED THE ORDER PASSED BY THE LEARNED CIT(APPEALS). 20. WE HAVE HEARD BOTH THE SIDES, PERUSED THE RECOR DS AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. ACCORDING TO THE ASSESSING OFFICER THE AMOUNT OF ` 1,54,93,244/- RECEIVED BY THE ASSESSEE IS A SHORT TERM CAPITAL GA IN. THE LEARNED CIT(APPEALS) BY CONSIDERING THE PROVISIONS OF SEC. 45(1A) AND SECTION 50 OF THE ACT HAS OBSERVED THE INSURANCE CLAIM RECEIVED BY THE ASSESSEE ON ACCOUNT OF THE DE PRECIABLE ASSETS AS SHORT TERM CAPITAL GAINS. AS PER THE PR OVISIONS OF SEC. 50 SINCE THE BLOCK OF ASSETS AFTER REDUCING TH E INSURANCE CLAIM RECEIVED IS STILL CONTINUING WITH THE POSITIV E VALUE, THERE WILL NOT BE ANY CAPITAL GAINS TO BE TAXED IN THE YE AR. THE ASSESSEE WAS HELD TO BE ENTITLED FOR THE DEPRECIATI ON ON THE WDV SO REDUCED BY THE VALUE OF THE INSURANCE CLAIM RECEIVED DURING THE YEAR. THUS THE LEARNED CIT(APPEALS) HAS HELD THAT THE ASSESSEE RIGHTLY REDUCED THE INSURANCE CLAIM RE CEIVED OF ` ITA.563/MDS/2012 14 1,54,93,244/- FROM THE OPENING WDV AS ON 01-04-2002 OF ` 9,00,33,053/- AND THEREFORE IT CANNOT BE TAXED AS S HORT TERM CAPITAL GAIN. WE FIND NO INFIRMITY IN THE ORDER P ASSED BY THE LEARNED CIT(APPEALS) . THEREFORE, THIS GROUND OF A PPEAL RAISED BY THE REVENUE IS DISMISSED. 21. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS PARTLY ALLOWED. ORDER PRONOUNCED ON FRIDAY, THE 24 TH OF AUGUST, 2012 AT CHENNAI. SD/- SD/- (ABRAHAM P. GEORGE) ( V.DURGA RAO ) ACCOUNTANT MEMBER JUDICIAL MEMBER CHENNAI, DATED THE 24 TH AUGUST, 2012. H. COPY TO: ASSESSEE/AO/CIT (A)/CIT/D.R./GUARD FILE