2019 (1) TMI 1962 - AT - Income Tax

Depreciation @60% on the equipments connected to V-SAT (i.e. Transformer UPS etc.) - HELD THAT - As we can see V-SAT cannot function in isolation without the help of computer. Therefore as relying on BSES YAMUNA POWERS LLD / BSES RAJDHANI POWERS LTD . 2010 (8) TMI 58 - DELHI HIGH COURT where in it is held that computer accessories and peripherals such as printers scanners and server form an integral part of the computer system. In fact the computer accessories and peripherals cannot be used without the computer. Consequently as they are part of the computer system they are entitled to depreciation at the higher rate of 60%.Thus assessee is entitled for 60% depreciation. Thus this ground of revenue is dismissed. Disallowance of administrative expenses u/s. 14A - HELD THAT - CIT(A) has rightly restricted as administrative expenses u/s. 14A and same does not require any kind of interference at our end. Thus we dismiss this ground of appeal of the revenue. Disallowance of amount paid in respect of provision for Employee Long-term Compensation Plan - HELD THAT - As we can see ld. A.O. had disallowed the provision for leave encashment as no payment has been made against the said provision during the year. In the case of Bharat Earth Movers 2000 (8) TMI 4 - SUPREME COURT has held if a liability has been ascertained with a reasonable certainty and the actual quantification is not material to claim the expenditure.Therefore respectfully following the aforesaid Hon ble Supreme Court judgment and in our considered opinion the ld. CIT(A) has rightly granted relief to the assessee. Therefore this ground of appeal is dismissed. Disallowance of weighted deduction u/s. 35(2AB) of recurring expenses related to building municipal taxes and salary to Mr. C. Dutt. - HELD THAT - In this case ld. CIT(A) has followed assessment year 2005-06 2012 (7) TMI 273 - ITAT AHMEDABAD to allow the claim - Decided against revenue.

Summary

Issues involved:
1. Appeal by Revenue against Assessee - Various grounds of appeal raised by Revenue.
2. Disallowances made by Assessing Officer - Depreciation, administrative expenses, provision for Employee Long-term Compensation Plan, garden expenses, weighted deduction.
3. First statutory appeal by Assessee before CIT(A).
4. Detailed analysis of each ground of appeal by Revenue and Assessee.

Analysis:

Ground 1 - Depreciation @60% on equipments connected to V-SAT:
- The issue was regarding the claim of depreciation at 60% on V-SAT equipment.
- The Delhi High Court judgment was cited to support the claim.
- Tribunal dismissed the Revenue's ground and allowed the depreciation at 60%.

Ground 2 - Disallowance of administrative expenses u/s 14A:
- Dispute over the disallowance of administrative expenses under section 14A.
- CIT(A) restricted the disallowance to ?5,00,000 based on the available funds.
- Tribunal upheld CIT(A)'s decision, dismissing Revenue's appeal.

Ground 3 - Disallowance of provision for Employee Long-term Compensation Plan:
- Dispute over the disallowance of ?39,08,141 for the provision.
- Assessee claimed the provision pertained to services rendered in a previous year.
- Tribunal upheld CIT(A)'s decision, dismissing Revenue's appeal.

Ground 4 - Disallowance of garden expenses:
- Issue related to disallowance of ?12,06,824 for garden expenses.
- CIT(A) followed a previous year's decision in favor of Assessee.
- Tribunal dismissed Revenue's ground, upholding the relief granted to Assessee.

Ground 5 - Disallowance of weighted deduction u/s 35(2AB):
- Dispute over disallowance of weighted deduction on recurring expenses.
- CIT(A) followed a previous year's decision and granted relief to Assessee.
- Tribunal dismissed Revenue's appeal, upholding CIT(A)'s decision.

Ground 6 - Capitalization of interest for R&D assets and depreciation on motor car:
- Issue regarding capitalization of interest and depreciation on motor car.
- CIT(A) allowed the claim following a previous year's decision.
- Tribunal dismissed the ground, upholding CIT(A)'s order.

Assessee's Appeal - Weighted deduction and disallowance under section 14A:
- Assessee's appeal included claims for weighted deduction and disallowance under section 14A.
- Tribunal dismissed the claim for weighted deduction based on previous decisions.
- Tribunal allowed the disallowance under section 14A in favor of the Assessee.

This detailed analysis covers the various grounds of appeal raised by the Revenue and the Assessee, along with the decisions made by the CIT(A) and the Tribunal for each issue involved in the legal judgment.