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TMI Blog2017 (5) TMI 1694X X X X Extracts X X X X X X X X Extracts X X X X ..... wed certain additional benefit, which was restricted by the proviso to only half of the same being granted in one assessment year, if certain condition was not fulfilled. But, that, in our considered view, would not restrain the assessee from claiming the balance of the benefit in the subsequent assessment year. The Tribunal has rightly held, that additional depreciation allowed under Section 32(i)(iia) of the Act is a one time benefit to encourage industrialization, and the provisions related to it have to be construed reasonably, liberally and purposively, to make the provision meaningful while granting additional allowance. We are in full agreement with such observations made by the Tribunal. - Decided in favour of assessee Addition of employees contribution towards PF/ESI paid belatedly - no deduction u/s 36(1)(va) - HELD THAT:- In the present case, the assessee had remitted the employees contribution beyond the due date for payment, but within the due date for filing the return of income. As relying on M/S. INDUSTRIAL SECURITY INTELLIGENCE INDIA PVT. LTD [ 2015 (7) TMI 1063 - MADRAS HIGH COURT] issue decided in favour of assessee. Disallowance u/s 14A r.w. Rule 8D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 32(1) and 32(1)(iia) and held that if the assessee has used the new plant and machinery below 180 days, it is only eligible for 50% of the additional depreciation as provided in the statute and strongly supported the assessment order. 5. On the other hand, the ld. Counsel for the assessee has submitted that the additional depreciation as provided by the Legislature, is a beneficial provision and if the assessee is not in a position to utilize in the year in which the machineries were purchased and installed, the remaining balance can be allowed in subsequent year and strongly relied on the decision in the case of CIT v. Rittal India Pvt. Ltd. (supra). 6. We have heard both sides, perused the materials on record and gone through the orders of authorities below. The issue involved in the appeal of the assessee is when the assessee has used new plant and machinery less than 180 days, whether the assessee is eligible for remaining balance of 50% of additional depreciation in subsequent year by carry forwarding the claim. In this case, the assessee has submitted that only 10% of depreciation was claimed in the year of installation since the assets were used fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... annot claim 100% additional depreciation and therefore, restricted 50% of the eligible additional depreciation to the assessee. This case law relied on by the ld. DR has no application to the facts of the present case. If the new asset acquired and installed and put it in use for more than 180 days, the assessee is eligible to claim 20% of additional depreciation. In the present case, the new asset acquired, installed and put it in use for less than 180 days, the assessee has claimed only 10% of the eligible additional depreciation in the relevant assessment year, which was allowed. Since the assessee was eligible to claim 20% additional depreciation on new asset acquired, the balance 10% of additional depreciation was claimed in the next year relevant to the assessment year under consideration. In similar facts and circumstances, in the case of CIT v. Rittal India Private Limited (supra), the Hon ble Karnataka High Court has observed and held as under: 7. Clause (iia) of Section 32(1) of the Act, as it now stands, was substituted by the Finance Act, 2005, applicable with effect from 0l.04.2006. Prior to that, a proviso to the said Clause was there, which provided for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ghtly held, that additional depreciation allowed under Section 32(1)(iia) of the Act is a onetime benefit to encourage industrialization, and provisions related to it have to be construed reasonably, liberally and purposively, to make the provision meaningful while granting additional allowance. We are in full agreement with such observations made by the Tribunal. 9. In view of the above judgement of Hon ble Karnataka High Court, we are of the considered opinion that the ld. CIT(A) has rightly followed the above judgement and directed the Assessing Officer to allow additional depreciation. Thus, we find no infirmity in the order passed by the ld. CIT(A) on this issue and the ground raised by the Revenue is dismissed. 10. The next ground raised in the appeal of the Revenue is that the ld. CIT(A) has erred in deleting the addition made in respect of employees contribution towards PF/ESI of ₹.1,84,154/-. The disallowance was made on the ground that the said contributions have been paid belatedly and therefore, no deduction under section 36(1)(va) of the Act can be claimed by the assessee. 11. On appeal, the ld. CIT(A) allowed the ground raised by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e's contribution of PF and ESI within the due dates specified under the respective Act. Aggrieved by the said order of assessment, the assessee preferred appeals before the Commissioner of Income Tax (Appeals) challenging the reopening as well as the disallowance. The Commissioner of Income Tax (Appeals) sustained the order of the assessment, thereby dismissed the appeals. Aggrieved by the same, the assessee preferred further appeals before the Tribunal. The Tribunal relied upon the decision of the Supreme Court in the case of CIT V. Alom Extrusions Ltd. reported in 319 ITR 306, decision of the Delhi High Court in the case of CIT V. Amil Ltd. reported in 321 ITR 508 and that of the Co-ordinate Bench of the Tribunal in the case of M/s.Venkateswara Electrical Industries P. Ltd. V. DCIT in ITA Nos.1344, 1345 and 1636/Mds/2014 dated 28.8.2014 held as follows: 5. Heard both sides. Perused orders of lower authorities and the decisions relied on before us. It is not in dispute that all these payments of provident fund ₹ 16,20,571/- and ESI ₹ 17,51,490/- were made beyond the grace period/due date allowed under Provident Fund ESI Acts but before due date for fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pectfully following the above, decision, we direct the Assessing Officer to delete disallowances made under section 43B of the Act for both these assessment years. The grounds of appeal raised by the assessee are allowed. 3. Aggrieved by the said order of the Tribunal, the Revenue is before this Court. 4. Heard learned Standing Counsel appearing for the Revenue and perused the materials placed before this Court. 5. We find that the Tribunal has rightly relied on the decision of the Supreme Court in the case of CIT V. Alom Extrusions Ltd. reported in 319 ITR 306, whereby, the Supreme Court held that omission of second proviso to Section 43B and amendment to first proviso by Finance Act, 2003 are curative in nature and are effective retrospectively, i.e., with effect from 1.4.1988 i.e., the date of insertion of first proviso. The Delhi High Court in the case of CIT V. Amil Ltd. reported in 321 ITR 508 held that if the assessee had deposited employee's contribution towards Provident Fund and ESI after due date as prescribed under the relevant Act, but before the due date of filing of return under the Income Tax Act, no disallowance could be made in v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee. Before the ld. CIT(A), it was the submission of the assessee that no amount of borrowed capital has been utilized for making investments capable of earning exempt income and relied on the decision in the case of CIT v. HDFC Bank Limited 89 CCH 185 (Mum) and in the case of CIT v. Hotel Savera 239 ITR 795 (Mad) and pleaded that there can be no disallowance under Rule 8D(2)(ii) of the IT Rules. With regard to disallowance under Rule 8D(2)(iii), it was the submission of the assessee that investments in subsidiary companies is purely for furtherance of strategic business interests and should not be taken into consideration while computing the disallowance under section 14A r.w. Rule 8D and relied on the decision in the case of EIH Associated Hotels Limited v. CIT (supra). It was also argued that disallowance under Rule 8D(2)(iii) should not be made on the total investments reflected in balance sheet but only on the investments that have given rise to the exempt income during the year under consideration. Reliance in this regard has been placed in the case of ACIT v. Computer Age Management Services (P) Limited in ITA No.1236 1240/Mds/2014 dated 28.11.2014. After consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pute disallowance under section Rule 8D(2)(iii) by taking only the investments which have given rise to the income during the year which does not form the part of total income. Subject to the above directions, appellant s claim of section 14A disallowance is partly allowed. From the appellate order, on verification of the financial details, the ld. CIT(A) has observed that the loans have been sanctioned for specific business purposes and the total term loans taken from the bank was amounted to ₹.30,24,44,747/-, whereas, the total interest on long term borrowings is at ₹.357.42 lakhs. He has further noticed that the capital, profit, reserve surplus, current and deposits were higher than the investments on securities capable of earning exempt income and presumed that investments made by the assessee is from own funds available and not out of the interest bearing borrowed funds. No details with regard to the statement of account, balance sheet, etc. were available on record for perusal. However, the ld. CIT(A) has stated that against fresh investments of ₹.13.36 crores, the assessee has net operating revenue of ₹.20.87 crores during the year and furt ..... X X X X Extracts X X X X X X X X Extracts X X X X
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