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2015 (11) TMI 850 - AT - Income TaxAddition of diversion of interest bearing funds for non-business purpose - CIT(A) deleted the addition - Held that - CIT(A) followed the judgment of the hon ble Bombay High Court rendered in the case of CIT v. Reliance Utilities and Power Ltd. 2009 (1) TMI 4 - HIGH COURT BOMBAY and the judgment of CIT v. Radico Khaitan Ltd. 2004 (9) TMI 37 - ALLAHABAD High Court and deleted both these disallowances. The learned Departmental representative for the Revenue could not controvert these findings of the Commissioner of Income-tax (Appeals). - Decided against revenue Addition on depreciation and additional depreciation on effluent plant - CIT(A) deleted the addition - Held that - CIT(Appeals) has given a categorical finding that cost of construction of tank, etc., forms an integral part of effluent treatment plant and therefore, depreciation on the same is allowable at the rate applicable for plant and machinery as against the rate of building allowed by the Assessing Officer. Regarding chrome recovery plant also, he has given a categorical finding in para 3.7 of his order that in rule 5 of the Income-tax Rules, 1962, 100 per cent. depreciation is allowable and since the plant is used for less than 180 days in the present year, it is allowable at 50 per cent. The learned Departmental representative for the Revenue could not controvert these findings of the Commissioner of Income-tax (Appeals). Hence we decline to interfere with the order of the Commissioner of Income-tax (Appeals) on these issues also because even if a claim was not made in the return of income, it can be made before the learned Commissioner of Income-tax (Appeals) if it is a legal claim - Decided against revenue Excess claim of additional depreciation on reconditioned imported machinery and vibrator staking machine - CIT(A) deleted the addition - Held that - Commissioner of Income-tax (Appeals) has relied upon a judgment of CIT v. Hindustan Milk Food Manufacturers Ltd. as reported in 1972 (10) TMI 33 - PUNJAB AND HARYANA High Court and Cochin Company v. CIT as reported in 1967 (3) TMI 19 - SUPREME Court where it was held that the machines which were reconditioned with substantially new parts are to be treated as new machines. CIT(Appeals) has reproduced a chart containing analysis of percentage of the cost of new parts to total cost indicating such percentage at 62.50 per cent. and 66.67 per cent. in two cases, 75.89 per cent. and 77.32 per cent. in two cases and more than 87 per cent. in remaining three cases. Hence under these facts, the decision of the learned Commissioner of Income-tax (Appeals) is in line with these judgments followed by him. No contrary judgment is cited by the learned Departmental representative for the Revenue. - Decided against revenue Additional depreciation on drum and paddle - CIT(A) deleted the addition - Held that - CIT (Appeals) has relied upon a judgment of CIT v. Surama Tubes P. Ltd. 1991 (1) TMI 9 - CALCUTTA High Court and on a judgment of Janta Sugar Industries v. CIT as reported in 2005 (2) TMI 12 - HIGH COURT, ALLAHABAD where it was held that for claiming depreciation and investment allowance, material date is the date of installation and not the date of acquisition. The disallowance was made by the Assessing Officer on this basis that the drums of ₹ 8,98,835 and paddles of ₹ 2,94,438 were purchased at the end of the financial year 2004-05 but installed in the financial year 2005-06. Since as per these judgments, the material date is the date of installation and not the date of acquisition we find no infirmity in the order of the Commissioner of Income-tax (Appeals). - Decided against revenue
Issues:
1. Deletion of addition of funds for non-business purposes. 2. Deletion of interest capitalized on funds used in another unit. 3. Deletion of addition of depreciation on effluent plant. 4. Allowance of depreciation on chrome recovery plant. 5. Deletion of excess claim of additional depreciation on imported machinery. 6. Deletion of additional depreciation on vibrator staking machine. 7. Deletion of additional depreciation on drum and paddle. Analysis: Issue 1: The Revenue appealed against the deletion of an addition of funds for non-business purposes. The Commissioner of Income-tax (Appeals) found that unsecured loans were covered by interest-free funds, following relevant judgments, and deleted the disallowance. The Appellate Tribunal upheld this decision, stating that the Revenue failed to challenge the findings effectively. Issue 2: Regarding the deletion of interest capitalized on funds used in another unit, the Commissioner found the funds were covered by interest-free funds, citing relevant judgments. The Tribunal upheld this decision, noting the Revenue's failure to counter the Commissioner's findings effectively. Issue 3: The Revenue challenged the deletion of depreciation on the effluent plant. The Commissioner allowed depreciation based on the plant's integral nature, contrary to the Assessing Officer's decision. The Tribunal upheld this, emphasizing that legal claims can be made before the Commissioner if supported by facts. Issue 4: In the case of depreciation on the chrome recovery plant, the Commissioner's decision to allow 50% depreciation was upheld by the Tribunal. The Tribunal emphasized that legal claims, even if not in the initial return, can be considered if supported by facts. Issue 5: The Revenue contested the deletion of excess claim of additional depreciation on imported machinery. The Commissioner relied on relevant judgments, treating reconditioned machines as new. The Tribunal upheld this decision, noting the absence of contrary judgments presented by the Revenue. Issue 6: Regarding the deletion of additional depreciation on the vibrator staking machine, the Commissioner's decision was upheld by the Tribunal. The Tribunal emphasized the applicability of relevant judgments and the absence of errors pointed out by the Revenue. Issue 7: The Revenue challenged the deletion of additional depreciation on the drum and paddle. The Commissioner's decision, based on the date of installation for claiming depreciation, was upheld by the Tribunal. The Tribunal found no fault in the Commissioner's decision based on relevant judgments. In conclusion, the Tribunal dismissed the Revenue's appeal, upholding the Commissioner's decisions on all issues raised.
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