2011 (9) TMI 1145 - AT - Income Tax

Summary

Issues involved: Revenue's appeals against CIT(A)'s orders for A.Y. 2000-01, 01-02, 02-03, 03-04 & 2005-06 challenging eligibility of Unit II for deduction u/s 80-IA and depreciation allowance on computer peripherals.

Deduction u/s 80-IA for Unit II:
The appellant contended that Unit II was independently functioning and fulfilled conditions for deduction u/s 80-IA, citing the Textile Machinery Corporation Ltd. case. CIT(A) allowed the deduction, emphasizing the unit's independent status. The revenue argued that Unit I's job work for Unit II was a tax avoidance mechanism. However, the counsel defended the legitimate business arrangement, supported by the ITAT's observations in the Associated Capsules (P) Ltd. case. The Tribunal upheld CIT(A)'s decision, noting that Unit II's independent nature was not compromised by job work from Unit I.

Depreciation on computer peripherals:
The counsel asserted that the issue was settled in favor of the assessee by various courts, which the revenue did not dispute. The Tribunal found no fault in CIT(A)'s decision to allow depreciation at 60% on computer peripherals and accessories for the relevant assessment years.

In conclusion, the Tribunal dismissed the revenue's appeals for both assessment years, upholding CIT(A)'s orders.