2011 (2) TMI 1459 - AT - Income Tax

Summary

Issues involved: Appeal against order of CIT(A) regarding additional depreciation on electrification, disallowance of additional depreciation on machinery acquired after 30-09-2006, and disallowance under section 14A of the Income Tax Act, 1961.

Additional Depreciation on Electrification:
The appeal was against the CIT(A)'s decision disallowing additional depreciation on electrification for the assessment year 2007-08. The Assessing Officer had disallowed the claim stating that electrification was not related to the manufacture or production of any article. The appellant argued that electrification was part of the plant and machinery, thus eligible for additional depreciation u/s. 32(1)(iia). The Tribunal clarified that electrification for providing power to plant equipment qualifies for additional depreciation, while fittings like lights and fans do not. As the electrification was integral to the manufacturing process, the appellant was entitled to the claim.

Disallowance of Additional Depreciation on Machinery:
Grounds 3 to 3.3 of the appeal challenged the disallowance of additional depreciation on machinery acquired post 30-09-2006. The issue was found to be covered by a previous Tribunal decision in the appellant's case for the assessment year 2005-06. The Tribunal upheld the CIT(A)'s decision based on the principle of judicial discipline, confirming the disallowance as per the earlier ruling.

Disallowance under Section 14A:
Grounds 4 and 4.1 contested the disallowance of `10,000/- under section 14A of the IT Act, 1961. Both parties agreed during the hearing that the issue should be sent back to the Assessing Officer for re-examination in line with the principles established by the Bombay High Court in a specific case. The Tribunal ordered the issue to be reconsidered by the Assessing Officer, granting the appellant an opportunity to present their case adequately.

In conclusion, the appeal was partly allowed for statistical purposes, with the Tribunal reversing the decision on additional depreciation for electrification and upholding the disallowance on machinery based on previous rulings. The issue of disallowance under section 14A was remanded for fresh consideration by the Assessing Officer.