9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2016 (9) TMI 593 - AT - Income TaxDeduction u/s 80HHC - violation of provisions of Rule 46A by allowing the claim of the assessee without due verification of the facts & figures required to arrive at the correct amount of allowance - DR was of the view that even the action of CIT(A) in coming to the conclusion that it is only the profit arising out of sale for transfer of DEPB which is covered u/s 28(iii) of the Act - Held that - We are of the view that even if the contention of the DR is accepted the same is without any merit in view of the decision of the Hon ble Supreme Court in the case of Topman Exports 2012 (2) TMI 100 - SUPREME COURT OF INDIA the computation of deduction u/s.80HHC as done by the CIT(A) is in order and calls for no interference. As far as violation of the provision of Rule 46A of the IT Rules as raised by the revenue is concerned, the ld. Counsel for the asessee had no objection if the figures which have been considered by CIT(A) and the statement in support of the same are re-considered by the AO. In view of the above, we set aside the order of CIT(A) in so far as it relates to the computation of the quantum of deduction u/s 80HHC of the Act in the light of the decision of the Hon ble Supreme Court in the case of Topman Exports (supra). For statistical purposes the appeal of the revenue is treated as allowed. Depreciation claim at 100% on pollution control equipment - Held that - Test of emission after installation of pollution control equipments was conducted by one M/s. Envirochek and a copy of the said report was filed before the AO. Order of the AO is silent on all these facts. The reasons assigned by the AO for rejecting the claim of 100% depreciation by the Assessee was, a mere observation that the assessee did not justify the claim for depreciation on pollution control equipments. There is no finding of the AO that the assessee did not manufacture pollution control equipments by utilising the raw materials which it had purchased. In the given circumstances we are of the view that the equipments in question on which the depreciation at 100% was claimed was pollution control equipments and the assessee was entitled to the claim of depreciation at 100% as claimed by it. We do not find any ground to interfere with the order of CIT(A) on this issue. Disallowance u/s 14A - Held that - As far as the disallowance on interest expenses is concerned the available funds available with the assessee were much more than the investments made by the assessee. Further there was short term capital gain of ₹ 460893/- on above investments, on which tax is duly paid.The deletion of the addition made on account of disallowance of interest expenses is therefore held to be proper and order of the CIT(A) on the same is confirmed. As far as the disallowance of other expenses is concerned it has been held by a co-ordinate Bench of this Tribunal in the case referred to by the CIT(A), that prior to A.Y.2008-09 Rule 8D was not applicable and disallowance u/s 14A of the Act had to be made on a reasonable basis. The Tribunal in several cases has applied 1% of the tax free income has amount which can be disallowed under the head Other Expenses This view of this tribunal has also been approved by the Hon ble Calcutta High Court. We therefore confirm the order of the CIT(A) on this issue also. Addition made on account Bad Debt - Held that - As rightly held by CIT(A) the deduction on account of bad debts had to be allowed if the debt in question or part thereof is written off as bad in the books of accounts of the assessee. There are other conditions for allowing the claim for deduction on account of bad debts but the existence of those conditions in the case of the assessee has not been disputed by the AO. The only dispute raised by the revenue is that the only part of the debt written off is bad and therefore it cannot be said that the debt itself has become bad. In our view this inference drawn by the AO is not correct and in the light of the decision of the Hon ble Supreme Court in the case of T.R.F. Limited vs CIT (2010 (2) TMI 211 - SUPREME COURT ) it is not necessary after the amendment to the law w.e.f. 01.04.1989 provision of section 36(1)(vii) of the Act that the assessee is no longer required to establish that the debt in question which is written off as bad has in fact become bad and irrecoverable
Issues Involved:
1. Deduction under Section 80HHC. 2. Depreciation on Pollution Control Equipment. 3. Disallowance under Section 14A. 4. Bad Debt Write-off. 5. Additional Depreciation under Section 32(iiia). Issue-wise Detailed Analysis: 1. Deduction under Section 80HHC: The Revenue appealed against the CIT(A)'s decision allowing the assessee's deduction under Section 80HHC for ?1,33,92,449/-. The AO had recomputed the deduction considering the entire value of DEPB licenses as profit under Section 28(iiid), reducing the deduction from ?1,45,45,505/- to ?85,84,324/-. The CIT(A) upheld the assessee's contention that only the profit on the transfer of DEPB should be considered, not the entire value, aligning with the Supreme Court's decision in Topman Exports. The Tribunal agreed with CIT(A) but remanded the case to the AO for re-verification of figures, treating the appeal as allowed for statistical purposes. 2. Depreciation on Pollution Control Equipment: The Revenue contested the CIT(A)'s deletion of ?14,32,581/- disallowed by the AO, who had allowed only 15% depreciation instead of 100%. The AO doubted the genuineness of the claim without proper justification. The CIT(A) found that the assessee had substantiated its claim with necessary evidence, including technical certificates and inspection reports, proving the equipment's nature. The Tribunal upheld CIT(A)'s decision, confirming the 100% depreciation allowance. 3. Disallowance under Section 14A: The AO disallowed ?3,88,731/- under Section 14A using Rule 8D, attributing interest and other expenses to tax-free income. The CIT(A) reduced the disallowance, accepting the assessee's claim of sufficient own funds and no interest expense for the investments. The CIT(A) applied a 1% disallowance on tax-free income for other expenses, following precedents. The Tribunal upheld this approach, confirming the CIT(A)'s order. 4. Bad Debt Write-off: The AO disallowed 50% of the bad debt claim of ?80,46,502/- on the grounds that the assessee had not established the debt's irrecoverability. The CIT(A) allowed the full claim, citing the Supreme Court's ruling in T.R.F. Limited, which states that post-amendment, merely writing off the debt in the books suffices. The Tribunal affirmed CIT(A)'s decision, dismissing the Revenue's appeal. 5. Additional Depreciation under Section 32(iiia): The assessee's cross-objection for additional depreciation at 20% on ?16,44,183/- was contingent on the pollution control equipment depreciation not being allowed at 100%. Since the Tribunal upheld the 100% depreciation, this ground was dismissed as infructuous. The assessee's objection to the partial disallowance under Section 14A was also dismissed, aligning with the CIT(A)'s reasoned judgment. Conclusion: - ITA No. 973/Kol/2013: Allowed for statistical purposes. - ITA No. 974/Kol/2013: Dismissed. - C.O. No. 70/Kol/2013: Dismissed. Order pronounced in the Court on 03.08.2016.
|
