2017 (5) TMI 1206 - AT - Income Tax

Deduction under section 80-IA - windmill unit established in 2002 - Held that - We find that on an identical issue in similar facts in assessee s own case for the assessment year 2010-11 held that each of these windmills were installed in different places and were governed by separate power purchase agreement separate meter connection and separate approvals as also meter and billing. The assessee s claim u/s.80IA of the Act rested on the premise that each of the windmill was a separate undertaking. While deciding the issue relating to grant of depreciation on windmill in assessee s own case for the A.Y. 2006-07 observed that each windmill is to be considered independent and separate and as a consequence deduction u/s.80IA to be computed and decided the issue in favour of the assessee Addition made in respect of employees contribution towards PF/ESI u/s 43B - belated payment - Held that - It is not disputed by the Revenue that the assessee has not paid the employer s contribution before the due date of filing of the return. Various Courts including the Hon ble Jurisdictional High Court in the case of CIT v. Nexus Computer (P) Ltd. 2008 (8) TMI 304 - MADRAS HIGH COURT it was held that the PF and ESI contribution paid belatedly but prior to due date of filing of return could not be disallowed under section 43B of the Act. Decided in favour of the assessee Excess depreciation claim - Held that - On an identical issue in the case of Devi Polymers P. Ltd. v. ACIT 2014 (4) TMI 1082 - ITAT CHENNAI held that additional depreciation to the extent not claimed by the assessee in the earlier year ought to be allowed. Thus the ld. CIT(A) allowed the claim of the assessee. We find no reason to interfere with the order of the ld. CIT(A) on this issue and hence the ground raised by the Revenue is dismissed. Addition u/s 14A - apportioning the interest expenses incurred the assessee in proportion to the investments the income from which was exempt and the total assets - Held that - The issue is squarely covered by the decision of the Tribunal in assessee s own case for the assessment years 2008-09 and 2009-10 as held AO is directed to recompute the disallowance after excluding the interest arising from borrowed funds specifically relatable to the business and specific source of income of the appellant.

Summary

Issues:
1. Deduction under section 80-IA of the Income Tax Act, 1961.
2. Addition made in respect of employees' contribution towards PF/ESI under section 43B of the Act.
3. Deletion of addition made under section 32(1)(iia) of the Act on account of depreciation claimed by the assessee.
4. Deletion of disallowance made under section 14A r.w. Rule 8D.

Issue 1: Deduction under section 80-IA of the Income Tax Act, 1961:
The appeal was against the order of the Commissioner of Income Tax (Appeals) regarding the allowance of deduction under section 80-IA of the Act. The Assessing Officer disallowed the deduction claimed by the assessee under section 80-IA for windmills. The Tribunal noted that each windmill was an independent unit with separate agreements and meters. Following a previous decision in the assessee's own case, the Tribunal upheld the CIT(A)'s decision in favor of the assessee. The Tribunal dismissed the Revenue's appeal on this issue.

Issue 2: Addition made in respect of employees' contribution towards PF/ESI under section 43B of the Act:
The dispute was over the disallowance of employees' contribution towards PF/ESI under section 43B as it was paid belatedly. The CIT(A) relied on a CBDT Circular and a High Court decision to allow the claim, stating that if the contribution was paid before the due date, no disallowance could be made under section 43B. The Tribunal, following the High Court's decision, upheld the CIT(A)'s order and dismissed the Revenue's appeal on this ground.

Issue 3: Deletion of addition made under section 32(1)(iia) of the Act on account of depreciation claimed by the assessee:
The Assessing Officer disallowed excess depreciation claimed by the assessee. The CIT(A) allowed the claim based on Tribunal decisions in similar cases. The Tribunal found no reason to interfere with the CIT(A)'s order, following the precedent set in previous cases, and dismissed the Revenue's appeal on this issue.

Issue 4: Deletion of disallowance made under section 14A r.w. Rule 8D:
The Assessing Officer disallowed a sum under section 14A r.w. Rule 8D(2)(ii) for interest expenses related to exempt income. The CIT(A) partly allowed the claim after considering submissions and previous Tribunal decisions. The Tribunal, following the CIT(A)'s observations and previous decisions, dismissed the Revenue's appeal on this ground.

In conclusion, the Tribunal dismissed the Revenue's appeal on all grounds, upholding the CIT(A)'s decisions regarding deduction under section 80-IA, employees' contribution towards PF/ESI, depreciation claimed by the assessee, and disallowance under section 14A r.w. Rule 8D.