ITAT Directs AO To Allow Depreciation On Molasses Tanks By Making The Correct Computation Of New Assets

The appellant/assessee is a limited company and is in the business of manufacturing sugar. It has its registered office at Kolkata and a factory at Sasa Musa, Dist. Gopalganj, Bihar. The assessee filed its return of income on 30.09.2014, reporting total income as nil. The statutory notices were issued, which were compiled by the assessee. In the course of assessment proceedings, the AO asked the assessee to furnish work of book profit under the provisions of section 115JB of the Act. The assessee submitted that it is not liable to pay tax on book profit and the provisions of section 115JB are not applicable in its case.

The AO determined the business income after making certain additions and disallowances. The assessee had reported a loss of Rs. 49,75,164 and claimed it as a carry forward to be set off in subsequent years. While completing the assessment, the AO did not set off past losses and held that the tax computed on total income on book profit was higher than the tax computed under the normal provisions. Therefore, the assessee was required to pay tax on the book profit under section 115JB.

The assessee appealed before the CIT (A) against the order of the AO. The CIT (A), in respect of the claim of depreciation on the molasses tank, directed the AO to allow depreciation after verifying that the new plant and machinery were put to use.

The ITAT directed the AO to allow the claim of the assessee on depreciation on molasses tanks by making the correct computation in respect of new assets and the correct written down value (WDV) of the molasses tanks.

"The assessee is already directed to furnish all the details and documentary evidence in support of its claim for due verification by the ld. AO to assist him in arriving at the correct amount of depreciation allowable on the molasses tanks," the ITAT said.

Case Title: Sasamusa sugar works pvt. Ltd. Vs DCIT

Case No: C.O. No.15/Kol/2017

Dated: 04.07.2022

Counsel For Cross Objectioner: AR D.K. Kothari

Counsel For Respondent: Addl. CIT Ranu Biswas

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