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2019 (7) TMI 1267 - AT - Income TaxAdditional depreciation relating to Plant Machinery put to use for less than 180 days - A.O following the order of the CIT(A) for assessment year 2012-13, disallowed 10% of the claim - HELD THAT - Tribunal in the assessee s own case for assessment year 2012-13 2016 (9) TMI 1338 - ITAT LUCKNOW dealt with the issue relating to additional depreciation claimed u/s 32(1)(ii)(a) on new plant machinery and allowed the appeal of the assessee. Since the CIT(A) has deleted the addition made on account of additional depreciation claimed by the assessee for assessment year 2012-13, relying on the order of the Tribunal (supra), wherein the Tribunal had directed the A.O to allow additional depreciation to the assessee being 50% of 20% of the cost of new Plant Machinery installed by the assessee, wherein the facts, mutatis mutandis, were the same, and which order of the Tribunal has not been to shown to have been upset, or even stayed, on further appeal, we find no merit in the grounds raised by the Revenue. Addition made u/s 14A read with Rule 8D(ii)/8D(iii) - HELD THAT - No contrary decision was brought to our knowledge by Learned D. R. against GODREJ AND BOYCE MFG. CO. LTD. VERSUS Dy. CIT 2010 (8) TMI 77 - BOMBAY HIGH COURT which may take a view that the Assessing Officer can compute the disallowance under Rule 8D without recording the non satisfaction about the creditworthiness of the claim of the assessee in respect of the expenditure in relation to the income which does not form part of the total income on the basis of the account of the assessee. - Decided against revenue
Issues Involved:
1. Deletion of addition made on account of wrong claim of additional depreciation. 2. Deletion of addition made under Section 14A read with Rule 8D(ii)/8D(iii). Issue-wise Detailed Analysis: 1. Deletion of Addition Made on Account of Wrong Claim of Additional Depreciation: The Revenue's primary contention was that the Commissioner of Income Tax (Appeals)-2, Kanpur (CIT(A)) erred in deleting the addition of ?9,57,30,050/- made on account of a wrong claim of additional depreciation. The Revenue argued that the provisions under section 32(1)(iia) of the Income Tax Act, 1961, were applicable, and since the plant and machinery were used for less than 180 days in the preceding financial year, the assessee was not eligible for additional depreciation. The assessee-company had claimed additional depreciation for Plant & Machinery used for less than 180 days in the earlier assessment year (2012-13). The Assessing Officer (A.O.) disallowed 10% of the claim, adding ?9,57,30,050/- to the income of the assessee, following the CIT(A)'s order for the previous year. The CIT(A) deleted the addition, referencing the Tribunal's order dated 21/9/2016 in ITA No.419/LKW/2016, which allowed the assessee's appeal for the same issue in the previous year. The Tribunal had interpreted section 32(1)(ii)(a) and concluded that the balance 10% additional depreciation could be availed in the subsequent assessment year. The Tribunal, in the present case, upheld the CIT(A)'s decision, noting that the facts were similar to the previous year and the Tribunal's earlier order had not been overturned or stayed. Thus, the Tribunal found no merit in the Revenue's grounds and rejected the appeal concerning additional depreciation. 2. Deletion of Addition Made Under Section 14A Read with Rule 8D(ii)/8D(iii): The second issue pertained to the deletion of an addition of ?2,22,870/- made under Section 14A of the Income Tax Act read with Rule 8D(ii)/8D(iii). The A.O. had observed that the assessee had made investments and incurred interest expenditure on borrowed funds but had not disallowed any expenditure under section 14A for earning exempt income. The A.O. thus disallowed 0.5% of the average value of investments, totaling ?2,22,870/-. The assessee argued before the CIT(A) that no specific satisfaction was recorded by the A.O. regarding the correctness of the claim that no expenditure was incurred to earn exempt income. The CIT(A) agreed, noting that the A.O. had mechanically applied the provisions of Section 14A read with Rule 8D without rejecting the assessee's claim. The CIT(A) referenced the Tribunal's order for the previous year, which directed the deletion of a similar addition. The Tribunal, in the present case, upheld the CIT(A)'s decision, emphasizing that the A.O. must record dissatisfaction about the correctness of the assessee's claim before applying Rule 8D. The Tribunal noted that the CIT(A) had rightly deleted the addition, relying on the Tribunal's earlier order, which had not been overturned or stayed. Thus, the Tribunal found no merit in the Revenue's grounds and rejected the appeal concerning the addition under Section 14A. Conclusion: The Tribunal dismissed both appeals of the Revenue, upholding the CIT(A)'s decisions to delete the additions made on account of additional depreciation and under Section 14A read with Rule 8D(ii)/8D(iii). The Tribunal's decision was based on the consistency of facts with previous years and the adherence to legal principles established in prior orders.
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