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2018 (12) TMI 517 - AT - Income TaxAllowance of remaining portion of 50% of additional depreciation u/s 32(i)(iia) of the Act on assets put to use for a period of less than 180 days - Held that - This issue is already settled in favour of assessee in its own case for assessment year 2010-11 2018 (8) TMI 1639 - ITAT KOLKATA as held he manner in which the Revenue chose to interpret the provision as it stood prior to its amendment would lead to discrimination in respect of plant and machinery which was used for less than 180 days as against that which was used for 180 days or more - upon a plain reading of the unamended provision it could not be said that the Assessee could not claim balance depreciation in the A. Y. which follows the A. Y. in which the machinery had been bought and used albeit for less than 180 days. - decided in favour of assessee Disallowance of lease rental expenditure - Held that - Similar claim of deduction was indeed allowed by the assessee in all the scrutiny assessments up to assessment year 2008-09. Hence there is no reason for the revenue to take a divergent stand during the year under appeal. Reliance in this regard is placed on the decision of Hon ble Supreme Court in the case of Radhaswami Satsang 1991 (11) TMI 2 - SUPREME COURT . In view of the aforesaid findings in the facts and circumstances of the case we find no infirmity in the order of the Ld. CIT(A) deleting the disallowance Addition u/s 14A - Held that - Referring to case of CIT vs. HDFC Bank Ltd. 2014 (8) TMI 119 - BOMBAY HIGH COURT we hold that no disallowance under second limb of Rule 8D(2) could be made in the facts and circumstances of the case. With regard to third limb of Rule 8D(2) we hold that only investments that had yielded dividend income are to be considered for the purpose of computing the disallowance under third limb of Rule 8D(2) which would be in consonance with the decision of this Tribunal in REI Agro Ltd. 2013 (9) TMI 156 - ITAT KOLKATA . Accordingly ground no. 1 raised by the assessee in cross objection is partly allowed. Set off of long term capital loss of assessment year 2010-11 against the long term capital gain of the year under appeal - Held that - It has already been held by the Hon ble Supreme Court in the case of CIT vs. Manmohan Das (Deceased) (1965 (11) TMI 33 - SUPREME COURT) that the eligibility of loss brought forward from earlier year for set off is to be examined by the AO only in the year in which such loss is sought to be set off against any income.Eligibility to claim set off of long term capital loss pertaining to assessment year 2010-11 of 8, 75, 732/- should be looked upon by the ld. AO only in the year in which decision sought to be set off against the income. Accordingly ground no. 3 raised by the assessee in cross objection is allowed.
Issues Involved:
1. Allowance of remaining portion of 50% of additional depreciation under Section 32(i)(iia) of the Income Tax Act. 2. Deletion of disallowance of lease rental expenditure. 3. Disallowance under Section 14A read with Rule 8D. 4. Disallowance of unpaid leave encashment under Section 43B(f). 5. Disallowance of carry forward of long-term capital loss. Detailed Analysis: 1. Allowance of Remaining Portion of 50% of Additional Depreciation: The issue was whether the CIT(A) was justified in granting the allowance of the remaining 50% of additional depreciation under Section 32(i)(iia) for assets used for less than 180 days in the financial year 2009-10. The assessee had claimed 50% of additional depreciation in AY 2010-11 and sought to claim the remaining 50% in AY 2011-12. The AO disallowed this claim, but the CIT(A) allowed it, relying on various High Court decisions. The Tribunal upheld the CIT(A)'s decision, referencing the Madras High Court's ruling in CIT vs. Shri T. P. Textiles Pvt. Ltd., which allowed the carry forward of the remaining depreciation to the subsequent year. 2. Deletion of Disallowance of Lease Rental Expenditure: The assessee had paid an upfront amount for leasehold land and claimed annual amortization as revenue expenditure. The AO disallowed this, following a previous year's decision, but the CIT(A) allowed it, citing consistency in allowing similar claims in earlier years. The Tribunal upheld the CIT(A)'s decision, referencing the Supreme Court's ruling in Madras Industrial Investment Corporation Ltd. vs. CIT, which allows spreading expenditure over ensuing years to avoid distorted profit representation. 3. Disallowance under Section 14A read with Rule 8D: The AO disallowed ?63,64,239 under Section 14A, which was upheld by the CIT(A). The Tribunal found that the assessee had sufficient own funds to make investments and thus, no disallowance under Rule 8D(2)(ii) was warranted. For Rule 8D(2)(iii), only investments yielding dividend income should be considered, consistent with the Tribunal's decision in REI Agro Ltd. Thus, the Tribunal partly allowed the assessee's cross objection. 4. Disallowance of Unpaid Leave Encashment under Section 43B(f): The Tribunal referred to its earlier decision in the assessee's case, where the issue was remanded to the AO to await the Supreme Court's final decision on the constitutionality of Section 43B(f), following the Calcutta High Court's ruling in Exide Industries Ltd vs. Union of India. The Tribunal remanded the issue to the AO for a decision based on the Supreme Court's final verdict. 5. Disallowance of Carry Forward of Long-Term Capital Loss: The AO disallowed the carry forward of long-term capital loss from AY 2010-11, stating it was from equity-oriented mutual funds on which STT was paid. The Tribunal held that the eligibility to set off such loss should be examined in the year it is sought to be set off, referencing the Supreme Court's decision in CIT vs. Manmohan Das. The Tribunal allowed the assessee's cross objection, permitting the carry forward of the loss. Conclusion: - The Revenue's appeal (I.T.A. No. 2237/Kol/2016) was dismissed. - The Assessee's Cross Objection (C.O. No. 96/Kol/2016) was partly allowed for statistical purposes.
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