2017 (6) TMI 1077 - AT - Income Tax

Sustaining the deduction made by A.O. on account of Back ended Capital Investment Subsidy out of the cost of Plant and Machinery and cold storage building - Held that - The Hon ble Rajasthan High Court in assessee s own case for A.Y. 2005-06 has approved the findings of the Coordinate Bench that the AO was not justified in reducing the amount of subsidy from the costs of the assets from AY 1999-2000 but such subsidy is liable to be reduced in AY 2007-08 and in fact has been adjusted in AY 2007-08. Respectfully following the jurisdictional Hon ble Rajasthan High Court decision as referred supra, the ground taken by the assessee are dismissed. Classification of cold storage building and resultant rate of depreciation - Held that - The same issue is covered in favour of the assessee by the decision of Coordinate Bench for A.Y. 2005-06 wherein cold storage building have been held as plant for the purposes of claiming depreciation. Hence the depreciation @ 15% on cold storage building as claimed by the assessee is sustained.

Summary

Issues:
1. Jurisdictional errors in assessment proceedings.
2. Disallowance of deductions under various sections.
3. Disallowance of depreciation claims.
4. Denial of deduction under section 80IB(11).
5. Alleged late deposit of ESI employee contribution.
6. Rejection of grounds of appeal.
7. Compliance with principles of natural justice and equity.

Jurisdictional Errors in Assessment Proceedings:
The appellant challenged the assumption of jurisdiction by the Income Tax Officer for scrutiny assessment, citing errors against CBDT instructions and circulars. The Tribunal dismissed grounds 1 to 4 as not pressed by the appellant. The issue of jurisdictional errors due to lack of order transferring the case was raised, but the Tribunal upheld the assessment order.

Disallowance of Deductions and Depreciation Claims:
The Tribunal allowed the deduction under section 80IB(11) based on a decision of the Hon’ble Rajasthan High Court in the appellant's favor. It also upheld the disallowance of deductions related to back-ended capital investment subsidy and excess claim of depreciation on cold storage building and plant and machinery. The Tribunal reasoned that the subsidy amount was correctly reduced from the cost of assets in the relevant assessment year.

Denial of Deduction under Section 80IB(11):
The Tribunal allowed the deduction under section 80IB(11) based on the appellant's previous case and the decision of the Hon’ble Rajasthan High Court. The denial of this deduction was overturned in favor of the appellant.

Alleged Late Deposit of ESI Employee Contribution:
The Tribunal allowed the appellant's claim regarding the alleged late deposit of ESI employee contribution, citing a decision of the Hon’ble Rajasthan High Court in a similar case. The issue was decided in favor of the appellant.

Rejection of Grounds of Appeal:
The Tribunal dismissed general grounds of appeal that lacked specific arguments from the appellant. Grounds 11 and 12 were considered general in nature and were consequently dismissed by the Tribunal.

Compliance with Principles of Natural Justice and Equity:
The appellant contended that the impugned appellate order was against the principles of natural justice and equity. However, the Tribunal did not find merit in this argument and upheld the order.

In conclusion, the Tribunal partially allowed the appeal, granting relief on certain issues while upholding the assessment order on others. The decision was based on legal precedents, jurisdictional rulings, and the specific merits of each ground raised by the appellant during the proceedings.