9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2013 (6) TMI 691 - AT - Income TaxAddition made u/s 36(1 )(ii) - CIT(A) has deleted the contentions additions - Held that - It is not the case of the AO that the assessee has diverted the funds borrowed, on interest, for the purpose of business to his son. Rather, he has accepted this that no such borrowed fund has been advanced to his son. Therefore, nexus between the borrowed fund and the advanced fund has neither been the issue nor the AO it has been alleged by the AO. We have found that the decision of Abhishek Industries 2006 (8) TMI 123 - PUNJAB AND HARYANA High Court has been discussed and distinguished in the later judgment passed in M/s. Mark Auto Industries 2011 (4) TMI 505 - PUNJAB AND HARYANA HIGH COURT . We have found force in the reasoning of ld. CIT(A) that the facts of Abhishek Industries are different in as much as that it is a case of Corporate entity wherein the share holders are not at liberty to withdraw the capital and the entire funds of the corporate entity are in a way like a water tight compartment, as there is nothing like business and perusal aspects. Otherwise also in the judicial discipline, the later judgment on the same issue which has discussed the earlier judgment becomes binding in nature. Accordingly, Ld. CIT(A) has passed a well reasoned order, wherein, he has explained as to how the decision of Abhishek Industries would not apply - Decided against revenue. Disallowance u/s 14A - expenses incurred on investments on which exempt income arises CIT(A) has deleted the additions - Held that - This ground is wrongly framed. The ld. CIT(A) has not deleted the entire disallowance of ₹ 5,02,628/- as has been pleaded in Ground No. (2), but he has sustained it at ₹ 4,41,272/-, instead, as has been claimed in the revised working by the assessee. Accordingly, we don t find any merit in this ground as well. The decision of Goetz India 2006 (3) TMI 75 - SUPREME Court bounds the AO only, and, otherwise also it is not the case of fresh claim made. We find no infirmity in the reasoning of ld. CIT(A) and, in the interest of justice, we confirm his finding. - Decided against revenue. Wind Mill and the capitalization of bills of infrastructure evacuation and transmission lines under the head of Wind Mill eligible for depreciation of 80% - right to use - Held that - No error in the impugned finding of Ld. CIT(A). We have tried and understood that the Income-tax Rules provide for allowance of depreciation at the rate of 80% on renewable energy devices like windmills and any other specially designed devices, which run on wind mills. The assessee has installed a wind farm project and has included it in the windmill block eligible for depreciation @80%. A windmill is a machine which uses energy of wind to rotate adjustable vanes sails which generate electricity. AO has misdirected himself and without understanding this peculiar circumstances has gone on hyper pedantic route. The assessee has made one-time payment by way of contribution for using the PE facilities which are owned by the EB, but the assessee has acquired a right to use this facility which is owned as a right so the assessee is the owner of that right in the facilities. Thus, it can be safely stated that the assessee is using the system as real owner alight he is not owner on papers. In the regard we draw support from the decision of CIT v. Fazilka Dabawali Transport Co. (P.) Ltd. 2004 (8) TMI 95 - PUNJAB AND HARYANA High Court and the case of CIT v. Smt. A SivaKami 2009 (11) TMI 127 - MADRAS HIGH COURT . As the appellant does not own the asset on paper but it is using the same as the owner to the extent he has made contribution for same. Further, the revenue realized from the operation of wind mill/power evacuation facility has been credited income. In the circumstances the assessee not being owner of the power evacuation facility in its books of accounts cannot be taken to be the basis to disallow the claim of depreciation. Accordingly, we uphold the order of ld. CIT(A). Any part of plant which is an integral part of capital asset which is legible for higher depreciation even if that other part is eligible, otherwise, for normal depreciation, it became entitled to higher rate of depreciation. For the above conclusion we rely on the decisions of (i) CIT v. Mahanagar Telephone Nigam Ltd. 2001 (10) TMI 69 - DELHI High Court and (ii) CIT v. Delhi Airport Service 2001 (9) TMI 39 - DELHI High Court interalia. Decided against revenue.
Issues Involved:
1. Deletion of an addition made under Section 36(1)(ii) of the Income Tax Act, 1961. 2. Disallowance under Section 14A of the Income Tax Act. 3. Depreciation claim on power evacuation facilities and electrical lines for a windmill project. Issue-wise Detailed Analysis: 1. Deletion of an Addition Made Under Section 36(1)(ii): The assessee's advance of Rs. 8.89 crores to his son without interest was scrutinized by the AO, who disallowed the interest debited in the P&L account under Section 36(1)(iii) on the grounds that the borrowed funds were used for business while interest-free advances were made from the assessee's own capital. The AO applied a notional rate of 12% p.a., amounting to Rs. 28,55,131/-. The CIT(A) deleted this addition, referencing the P&H High Court decision in CIT v. Mark Auto Industries Ltd., which held that no notional disallowance can be made if there is no nexus between borrowed funds and advances made to relatives. The Tribunal upheld the CIT(A)'s decision, noting that the AO did not allege any diversion of borrowed funds for non-business purposes and that the later judgment from the jurisdictional High Court (Mark Auto Industries) distinguished from the earlier Abhishek Industries case, thus binding in nature. 2. Disallowance Under Section 14A: The AO disallowed Rs. 5,02,628/- under Section 14A, which pertains to expenses incurred on investments generating exempt income. During assessment, the assessee revised this disallowance to Rs. 4,41,272/- as per Rule 8D, which the AO accepted but did not entertain due to the Supreme Court's ruling in Goetze (India) Ltd. v. CIT. The CIT(A) reduced the disallowance to Rs. 4,41,272/- and ruled that the Goetze India decision only bound the AO and did not apply to claims made during assessment proceedings. The Tribunal found no merit in this ground, confirming the CIT(A)'s reasoning and dismissing the revenue's appeal. 3. Depreciation Claim on Power Evacuation Facilities and Electrical Lines: The assessee included expenses for power evacuation facilities and electrical lines in the windmill block, claiming 80% depreciation. The AO treated these expenses as capital expenditure and allowed only 15% depreciation, arguing that these facilities are part of the power transmission network, not renewable energy devices. The CIT(A) found that the power evacuation facilities are integral to the windmill project and considered the assessee as the beneficial owner of these facilities, thus eligible for 80% depreciation. The Tribunal upheld the CIT(A)'s decision, emphasizing that the power generation, transmission, and distribution systems are integral to the windmill and eligible for higher depreciation. The Tribunal also referenced the beneficial ownership concept, supporting the assessee's claim for higher depreciation on the power evacuation facilities. Conclusion: The Tribunal dismissed the revenue's appeal, upholding the CIT(A)'s decisions on all grounds, including the deletion of the addition under Section 36(1)(ii), the revised disallowance under Section 14A, and the depreciation claim on power evacuation facilities and electrical lines. The judgment favored the assessee.
|
