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2017 (11) TMI 60 - AT - Income TaxDisallowance of depreciation claimed on wind mill @ 80% - Held that - As in appellant s own case for earlier years, depreciation @ 80% on Wind mill, its civil construction and electrical installation was found to be allowable by this Hon ble Tribunal. Further, in case of CIT vs. Mehru Electricals & Mechanical Engg. (P) Ltd. 2016(7) TMI 708 - RAJASTHAN HIGH COURT has held that assessee was entitled to depreciation on a room construction along with the cost of erection and installation of electrical items covered under Plant and machinery for a wind mill, entitled for depreciation at the same rate as applicable to the wind mill. - Decided against revenue Non deduction of tds interest payment on NDFs - Held that - We find that the ld. CIT(A) has followed the directions of the Co-ordinate Bench in assessee s own case for A.Y. 2011-12 and has remanded the matter back to the Assessing Officer to verify the certificates from various NBFCs to whom the assessee has paid interest during the year in order to verify where they have offered the same in their return of income and deposited taxes thereon. Further in respect of testing charges of ₹ 1,83,732/-, the ld. CIT(A) has confirmed the disallowance on account of non-deduction of TDS following the decision of the Hon ble Supreme Court in case of Palam Gas Service 2017 (5) TMI 242 - SUPREME COURT and in respect of which there is no dispute. We accordingly do not see any infirmity in the order of the ld. CIT(A) hence, the same is confirmed. The ground of appeal taken by the Revenue is dismissed Disallowance of contribution to PF & ESI beyond the prescribed time limit - Held that - CIT(A) has given a finding that the contribution to PF & ESI has been paid by the appellant before due date of filing the return of income u/s 139(1) and the said finding remained uncontroverted before us. Further, the issues is covered in favour of the assessee by the decision of Hon ble Rajasthan High Court in case of CIT vs. State Bank of Bikaner & Jaipur and other cases 2014 (5) TMI 222 - RAJASTHAN HIGH COURT which has rightly been followed by the ld. CIT(A). We accordingly do not see any infirmity in the order of the ld. CIT(A) hence, the same is confirmed. Disallowance u/s 14A - Held that - It is noted that the investment worth ₹ 45.07 lacs in equity shares of M/s Anamika Oil Pvt. Ltd. have been made by the assessee in the earlier years and further, fresh investment worth ₹ 40 lacs have been made on 29.03.2012. If we consider the availability of interest free funds during the year, it is noted that interest free funds at the beginning of the year stood at ₹ 20.38 crores and at the end of the year stood at ₹ 25.81 Cr. A presumption will therefore arise that the investment were made out of interest free funds and not out of the borrowed funds especially in view of the fact that no nexus has been established between the borrowed funds and the investment in the equity shares by the AO. In light of above, no disallowance under section 14A is called for in the instant case. The revenue s ground of appeal is dismissed. Addition for business expenses - Held that - Assessing Officer has disallowed 10% of the conveyance and telephone holding that the expenses are not open for verification and the element of personal use cannot be ignored, which has been confirmed by the ld. CIT(A). There is no basis for adhoc disallowance in the eyes of law. Hence, the disallowance so made by the AO and confirmed by the ld CIT(A) is hereby deleted.
Issues Involved:
1. Disallowance of depreciation claimed on windmill. 2. Disallowance under Section 40(a)(ia) of the IT Act. 3. Disallowance of employees' contribution to PF & ESI beyond the prescribed time limit. 4. Application of Section 43B vs. Section 36(1)(va) r.w.s. 2(24)(x) regarding employees' contribution to PF & ESI. 5. Disallowance under Section 14A of the IT Act. Detailed Analysis: 1. Disallowance of Depreciation on Windmill: The Revenue challenged the CIT(A)'s decision to allow depreciation at 80% on the entire windmill, including the building and electrical installations. The Tribunal upheld the CIT(A)'s decision, referencing previous Tribunal decisions and the Rajasthan High Court's ruling in CIT vs. Mehru Electricals & Mechanical Engg. (P) Ltd., which allowed similar depreciation claims. The Tribunal found no infirmity in the CIT(A)'s order and dismissed the Revenue's appeal, confirming the deletion of the disallowance. 2. Disallowance under Section 40(a)(ia): The Revenue contested the CIT(A)'s deletion of the disallowance of ?27,94,439/- under Section 40(a)(ia) due to non-deduction of TDS. The Tribunal noted that the CIT(A) had remanded the matter to the AO to verify certificates from payees confirming the reporting of income and payment of taxes. The Tribunal found the CIT(A)'s approach consistent with previous Tribunal decisions and confirmed the deletion of the disallowance, dismissing the Revenue's appeal. 3. Disallowance of Employees' Contribution to PF & ESI: The Revenue appealed against the CIT(A)'s deletion of the disallowance of ?21,250/- for late deposit of employees' PF & ESI contributions. The Tribunal upheld the CIT(A)'s decision, noting that the contributions were paid before the due date for filing the return under Section 139(1). The Tribunal referenced the Rajasthan High Court's decision in CIT vs. State Bank of Bikaner & Jaipur, which supported the CIT(A)'s ruling. The Tribunal dismissed the Revenue's appeal. 4. Application of Section 43B vs. Section 36(1)(va): The Revenue argued that employees' contributions to PF & ESI should be governed by Section 36(1)(va) r.w.s. 2(24)(x), not Section 43B. The Tribunal rejected this argument, affirming the CIT(A)'s application of Section 43B, which allows deductions if payments are made before the due date for filing the return. The Tribunal dismissed the Revenue's appeal. 5. Disallowance under Section 14A: The Revenue contested the CIT(A)'s restriction of the disallowance under Section 14A to ?2,82,352/- from ?6,00,493/-. The Tribunal found that the investments were made from interest-free funds and no exempt income was received from the investments. Citing various High Court rulings, the Tribunal held that no disallowance under Section 14A was warranted in the absence of exempt income. The Tribunal dismissed the Revenue's appeal and allowed the assessee's cross-objection. Additional Issue: The assessee's cross-objection regarding the disallowance of ?29,350/- for business expenses was upheld by the Tribunal. The Tribunal found no basis for the AO's adhoc disallowance of 10% of conveyance and telephone expenses and deleted the disallowance. Conclusion: The Tribunal dismissed the Revenue's appeal and allowed the assessee's cross-objection, confirming the CIT(A)'s order on all contested issues. The judgment was pronounced in the open court on 26/10/2017.
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