1991 (11) TMI 89 - AT - Income Tax

Summary

Issues:
1. Allowance of depreciation, initial depreciation, and investment allowance on machinery for assessment year 1984-85.
2. Denial of grant of deductions by the ITO based on the installation and use of the machinery.
3. Consideration of additional evidence by the CIT(Appeals) in contravention of rule 46A.
4. Cancellation of interest charged under sections 215 and consequential relief under sections 139(8) and 215.

Analysis:

Issue 1:
The appeal concerned the allowance of depreciation, initial depreciation, and investment allowance on machinery purchased during an extended accounting year. The ITO denied the deductions, suspecting the intention behind changing the previous year to claim substantial deductions. The CIT(Appeals) directed the ITO to allow the deductions after finding that the machinery was purchased, installed, and used before the end of the extended accounting year.

Issue 2:
The Sr. D.R. argued against the CIT(Appeals)' decision, claiming it was impossible to install the heavy machinery in a short time as stated by the assessee. However, the Tribunal found evidence supporting the installation and use of the machinery before the deadline. The Tribunal also highlighted that denial of depreciation for an asset acquired, installed, and used within the extended period was not valid under the law.

Issue 3:
The Sr. D.R. contended that the CIT(Appeals) considered additional evidence in violation of rule 46A. The Tribunal disagreed, stating that the evidence merely confirmed existing facts on record. The Tribunal upheld the validity of the CIT(Appeals)' decision based on the evidence presented and the legal provisions regarding depreciation.

Issue 4:
Regarding the cancellation of interest charged under sections 215 and the applicability of sections 139(8) and 215 after granting deductions, the Tribunal agreed with the CIT(Appeals) that no interest would remain chargeable post the allowance of deductions. The Tribunal directed the assessing authority to grant consequential relief accordingly.

In conclusion, the Tribunal dismissed the appeal, affirming the decisions of the CIT(Appeals) regarding the allowance of deductions and the cancellation of interest charges under relevant sections.