2017 (5) TMI 789 - HC - Income Tax

Allowability of deduction in respect of interest to financial institutions under Section 43B - Held that - An affidavit dated 30.03.2017 has been filed by Smt. Anuradha Mukherjee, Commissioner of Income Tax, Faridabad to the effect that as per Section 43B of the Act, the interest liability incurred during the assessment year 1994-95 by the assessee was paid by it during the assessment year 1995-96 and claimed as deduction in computation of income for the assessment year 1995-96. Since payment of interest had been made during the assessment year 1995-96 for the interest liability incurred during the assessment year 1994-95, the allowance could be given for the assessment year 1995-96. It has further been stated that the above relief is subject to the fact that no deduction had been claimed for the assessment year 1994-95 for the amount of interest. - Decided against revenue. Allowability of depreciation - Held that - A categorical finding has been recorded by the Tribunal that majority of the work was completed even prior to the commencement of the financial year and since as per the certificate of the Engineer installing the furnaces that the same were commissioned in the last week of August 1994 to March 1995, the assessee had rightly claimed depreciation thereon. It was thus concluded that whole of the expenses covered erection and installations were complete before the end of the financial year and hence entitled to depreciation. Thus, no error was found in the order passed by the Assessing Officer granting depreciation.- Decided against revenue

Summary

Issues involved:
1. Allowability of deduction in respect of interest to financial institutions under Section 43B of the Income Tax Act, 1961.
2. Installation of Pushar Type Furnaces and claiming depreciation.

Analysis:

Issue 1: Allowability of deduction in respect of interest to financial institutions under Section 43B of the Income Tax Act, 1961:
The appellant-revenue challenged the order passed by the Tribunal regarding the deduction of interest payments made by the assessee for the assessment year 1994-95 but claimed in the computation of income for the assessment year 1995-96. The Commissioner of Income Tax, Faridabad, in an affidavit, clarified that as per Section 43B of the Act, the interest liability incurred in 1994-95 and paid in 1995-96 could be claimed as a deduction for the latter year. The affidavit emphasized that no deduction had been claimed for the interest amount in the previous year. Consequently, the court ruled against the revenue on this issue.

Issue 2: Installation of Pushar Type Furnaces and claiming depreciation:
The dispute revolved around the installation of Pushar Type Furnaces and claiming depreciation on the same. The Tribunal accepted the certificate issued by M/s S.L. Graham and Company Limited, stating that the furnaces were installed before the end of the financial year. The revenue contended that the furnaces were installed after the end of the assessment year 1995-96 and thus depreciation should not be allowed. However, the Tribunal found no error in the Assessing Officer's decision to grant depreciation, as most of the work was completed before the end of the financial year, as certified by the engineer. The court upheld the Tribunal's findings, dismissing the appeal by the revenue.

The court addressed the specific questions raised by the revenue and provided detailed reasoning based on the facts and legal provisions. The judgment clarified the interpretation and application of Section 43B of the Income Tax Act, 1961, and the criteria for claiming depreciation on assets. The decision was based on a thorough analysis of the evidence and submissions made by both parties, ensuring a fair and just outcome in the matter.