2014 (1) TMI 1752 - AT - Income Tax

Additional depreciation in respect of power plant - Held that - CIT(A) has relied upon the decisions of the Hon ble Madras High Court in the cases of Hi-Tech Arai Limited 2009 (9) TMI 60 - MADRAS HIGH COURT VTM Limited 2009 (9) TMI 35 - MADRAS HIGH COURT and Texmo Precision Castings (2009 (10) TMI 140 - MADRAS HIGH COURT ) for the purpose of holding that the assessee is eligible for additional depreciation as per provisions of section 32(1)(iia) of the Act. In the absence of any decision to the contrary much less any decision of the Hon ble Jurisdictional High Court on the issue to the contrary we are of the view that the order of the ld.CIT(A) on this issue is on a right footing and does not call for any interference - Decided against revenue Deduction u/s. 35D - CIT(A) allowed the claim admitting additional evidence - Held that - . A perusal of the order of the ld.CIT(A) clearly shows that the ld.CIT(A) has deleted the disallowance by holding that the payments are in the nature of expenditure for underwriting commission and brokerage paid for certification fees allowable under section 35D of the Act. Admittedly the fact that the AO is able to extract the figures in paras 4.8 and 4.9 of his order would clearly show that all the papers were before the AO. Further no affidavit has been filed before the tribunal under Rule 11 of the I.T Rules nor the revenue has been able to substantiate that such evidences were not before the AO by production of any record. In the circumstances we are of the view that the finding of the ld.CIT(A) on this issue is on a right footing and does not call for any interference - Decided against revenue Disallowance u/s 43B - as per the assessee that service tax has been paid before the due date as provided u/s. 43B - Held that - Admittedly the provisions of section 43B of the Act applies to payment of service tax. It is noticed that service tax along with interest for an amount of 9, 20, 997/- has been paid on 5-12-2007 as per challans. The service tax relates to assessment year 2007-08 which has been paid during the assessment year 2008-09. Consequently in view of the provisions of section 43B of the Act as the service tax is paid on 5-12-2007 the same is liable to be allowed in computing the total income for the assessment year 2008-09. Consequently the AO is directed to grant the assessee the benefit of deduction u/s. 43B of the Act towards service tax paid by the assessee to the extent of 9, 20, 997/- - Decided in favour of assessee

Summary

Issues involved:
1. Addition of additional depreciation under Section 32 of the Income Tax Act.
2. Allowance of deduction under Section 35D and admission of fresh evidence.
3. Disallowance of Service Tax payments under Section 43B.

Analysis:

Issue 1: Addition of additional depreciation under Section 32:
- The Revenue appealed against the deletion of an addition of Rs. 4,17,28,868 made by the Assessing Officer for additional depreciation.
- The Revenue argued that the assessee did not qualify for additional depreciation under Section 32(1)(iia) as the option under rule 5 was not exercised.
- The CIT(A) allowed the claim based on judicial precedents from the Madras High Court.
- The Tribunal upheld the CIT(A)'s decision, citing no contrary decisions and emphasizing the reliance on the Madras High Court rulings.

Issue 2: Allowance of deduction under Section 35D and admission of fresh evidence:
- The Revenue contested the allowance of deductions under Section 35D by admitting fresh evidence in violation of Rule 46A(3).
- The fresh evidence included an underwriting agreement and a bill not presented before the Assessing Officer.
- The CIT(A) upheld the deduction, stating that the expenditure was legitimate and not capital in nature.
- The Tribunal supported the CIT(A)'s decision, noting that all relevant papers were before the Assessing Officer, and no evidence was provided to dispute this.

Issue 3: Disallowance of Service Tax payments under Section 43B:
- The assessee filed a cross objection regarding the disallowance of Service Tax payments under Section 43B.
- The Tribunal directed the AO to allow the deduction for Service Tax payments made before the due date as per Section 43B, granting the assessee the benefit of Rs. 9,20,997 paid in the assessment year 2008-09.
- Consequently, the cross objection filed by the assessee was allowed.

In conclusion, the Tribunal dismissed the Revenue's appeal for the assessment year 2008-09 while allowing the cross objection of the assessee, emphasizing the correct application of provisions under the Income Tax Act in each issue raised.