2018 (5) TMI 1926 - AT - Income Tax

Depreciation u/s 32(1) - written down value on which depreciation was to be allowed for the year under consideration should have been higher to that extent - HELD THAT - As decided against the assessee by the decision of the Hon ble Supreme Court in assessee s own case i.e. Plastiblends India Ltd. v. Additional CIT 2017 (10) TMI 423 - SUPREME COURT . DR relies on the above decision. We have heard the rival submissions and perused the relevant materials on record. In the above decision it has been held that quantum of deduction under section 80-IA is not dependent upon assessee claiming or not claiming depreciation because under section 80-IA quantum of deduction has to be determined by computing total income from business after deducting all deductions allowable under sections 30 to 43D of the Act. Following the above decision we uphold the order of the Ld. CIT(A). Disallowance u/s 14A under Rule 8D(2)(iii) - HELD THAT - Disallowance of other direct or indirect expenditure the assessee has computed the disallowance by allocating the salary paid to junior accountant. We do not agree with this computation of disallowance by the assessee. It is an undisputed fact that investment is a policy decision taken by the Board of Directors at the highest level which requires lot of consultancy from various experts. Therefore the disallowance u/s. 14A r.w. Rule 8D(2)(iii) becomes imperative as the disallowance have been computed by the AO as per the applicable provisions of law. Appeal is dismissed.

Summary

Issues:
- Disallowance of depreciation under section 32(1) of the Income Tax Act
- Disallowance of expenditure under section 14A of the Act

Disallowed Depreciation Issue:
The appeal involved the disallowance of depreciation under section 32(1) of the Income Tax Act. The appellant argued that the written down value for depreciation should have been higher due to disclaimed deduction in earlier years. However, it was noted that the quantum of deduction under section 80-IA is not dependent on claiming or not claiming depreciation. The Tribunal upheld the order of the Ld. CIT(A) based on a previous Supreme Court decision in a similar case.

Disallowance of Expenditure Issue:
Regarding the disallowance of expenditure under section 14A of the Act, the appellant had credited dividend income as exempt under section 10(34) but offered a certain amount for disallowance under section 14A. The Assessing Officer made a disallowance under Rule 8D(2)(ii) and Rule 8D(2)(iii), leading to a total disallowance after adjustments. In appeal, the Ld. CIT(A) restricted the disallowance to a lower amount. The Tribunal referred to a previous decision in the appellant's case for AY 2008-09, where a similar disallowance was upheld. The Tribunal agreed with the reasoning for disallowance under Rule 8D(2)(iii) and upheld the order of the Ld. CIT(A) based on the facts being identical.

In conclusion, the appeal was dismissed, and the Tribunal pronounced the order in open court on 31/05/2018.