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Issues:
1. Additional depreciation and investment allowance on computers. 2. Depreciation on assets acquired from a dissolved firm. 3. Cancelling interest charged under s. 216. 4. Allowance of depreciation on assets reduced by subsidy received. Detailed Analysis: 1. The first issue in this case pertains to the allowance of additional depreciation and investment allowance on computers. The Department contended that the computer should be classified as office equipment rather than plant and machinery. However, the CIT(A) upheld the claim of the assessee, noting that the computers were used in designing pressure blasting machines, which were crucial for the manufacturing process. The ITAT, Jaipur, agreed with the CIT(A) and emphasized the broad utility of computers in various activities, citing a precedent from the Bombay Bench of the Tribunal. The ITAT confirmed the decision of the CIT(A) and rejected the Department's ground of appeal. 2. The second issue concerns the depreciation on assets acquired from a dissolved firm. The assessee claimed depreciation based on the book value of the assets acquired, while the AO allowed depreciation on the written down value of the erstwhile firm. The CIT(A) supported the assessee's claim, stating that the circumstances did not warrant the application of Explanation 3 to section 43(1). The ITAT concurred with the CIT(A), highlighting that tax planning measures are not objectionable unless they violate legal or accounting norms to evade taxes. Referring to a decision by the Cochin Bench of the Tribunal, the ITAT upheld the CIT(A)'s decision and dismissed the Department's ground of appeal. 3. The third issue revolves around the cancellation of interest charged under section 216. The CIT(A) annulled the interest levied, citing legal grounds and the merits of the case. The ITAT analyzed section 216 and emphasized that interest should be levied only in cases where there is a deliberate deferral of advance tax payments. The ITAT noted that the AO must provide the assessee with an opportunity to explain the situation before levying interest under section 216. In this case, the AO did not pass a detailed order, leading the CIT(A) to rightfully cancel the interest. The ITAT upheld the CIT(A)'s decision and rejected the Department's ground of appeal. 4. The final issue pertains to the allowance of depreciation on assets reduced by subsidy received by the assessee. The ITAT dismissed this ground based on a Supreme Court decision in the case of CIT vs. P.J. Chemicals Ltd., which favored the assessee. Consequently, the ITAT dismissed the appeal in its entirety. In conclusion, the ITAT Jaipur upheld the decisions of the CIT(A) on all grounds raised by the Department, emphasizing the importance of legal principles and proper application of tax laws in determining the outcomes of the appeal.
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