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2021 (1) TMI 829 - AT - Income TaxDisallowances u/s 80P(2)(d) - assessee has claimed exempted interest and dividend income u/s. 80P(2)(d) - HELD THAT - As decided in own case 2013 (9) TMI 1114 - ITAT AHMEDABAD The plain language of section did not speak of any such adjustment. The only requirement was that income should be received from investment in co-operative societies and co-operative banks. Since in the present case, it was undisputed fact that income claimed u/s. 80P(2)(d) was received from the investment made in co-operative societies and co-operative banks, therefore assessee was eligible for deduction u/s. 80P(2)(d) - even otherwise since assessee was having mixed funds and the interest free funds were more than investment in co-operative banks and cooperative societies no disallowance was called for from eligible deduction u/s 80P(2(d) of the Act. - Decided against revenue. Disallowance on additional deprecation claimed as plant and machinery other than milk can equipments - HELD THAT - As decided in own case 2018 (6) TMI 415 - ITAT AHMEDABAD this additional benefit is to give impetus to industrialization and the basic intention and purpose of these provisions can be reasonably and liberally held that the assessee deserves to get the benefit in full when there is no restriction in the statute lo deny the benefit of balance of 50% when the new plant and machinery were acquired and use for less than 180 days. One time benefit extended to assesses has been earned in the year of acquisition of new plant and machinery. It has been calculated @ 15% but restricted to 50% only on account of usage of these plant machinery in the year of acquisition. In section 32(1 (iia) the expression used is shall be allowed . Thus the assessee had earned the benefit as soon as he had purchased the new plant and machinery in full but it is restricted to 50% in that particular year on account of period of usages. Such restrictions cannot divest the statutory right, Law docs not prohibit that balance 50% will not be allowed in succeeding year. The extra depreciation allowable u/s 32 1) (iia) in an extra incentive which has been earned and calculated in the year of acquisition but restricted for that year to 50% on account of usage. The so earned incentive must be made available in the subsequent year. The overall deduction of depreciation u/s 32 shall definitely not exceed the total cost of plant machinery. In view of this matter, we set aside the orders of the authorities below and direct to extend the benefit. Disallowance of additional depreciation on milk equipment - CIT- A allowed claim - HELD THAT - As decided in own case 2018 (6) TMI 415 - ITAT AHMEDABAD A perusal of the order of the ld.CIT(A) would indicate that there is no distinction between the expression plant for allowing normal depreciation vis-a-vis additional depreciation on that item. The ld AO has created an artificial distinction on that ground. After going through the order of the ld.CIT(A) we are satisfied that the ld.CIT(A) has examined the issue with all possible angle, and thereafter held that depreciation is admissible to the assessee.
Issues Involved:
1. Deleting the disallowance under Section 80P(2)(d) of ?2,32,84,772. 2. Deleting the disallowance of additional depreciation of ?3,21,16,870 on account of Plant & Machinery. 3. Deleting the disallowance of additional depreciation on Milk Cans & Equipment of ?40,36,716. 4. Cross Objection regarding the interest charged under Section 234A of ?4,71,300. Issue-wise Detailed Analysis: 1. Deleting the disallowance under Section 80P(2)(d) of ?2,32,84,772: The assessee claimed exemption for interest and dividend income totaling ?2,32,84,772 under Section 80P(2)(d) of the Income Tax Act. The Assessing Officer disallowed this claim, arguing that the assessee failed to maintain separate accounts for each source of funds and their investments. The CIT(A) deleted the disallowance, stating that the issue had been favorably adjudicated for the assessee by the ITAT and the Hon'ble Gujarat High Court in previous years. The ITAT upheld the CIT(A)'s decision, noting that the assessee had sufficient own funds to cover the investments, and the interest-free funds were more than the investments made. Therefore, the assessee was eligible for the deduction under Section 80P(2)(d). 2. Deleting the disallowance of additional depreciation of ?3,21,16,870 on account of Plant & Machinery: The Assessing Officer disallowed additional depreciation claimed by the assessee, arguing that it was allowable only in the year of capacity expansion and not in subsequent years. The CIT(A) allowed the appeal, referencing a decision by the ITAT in the assessee's favor for the previous year. The ITAT upheld the CIT(A)'s decision, citing a prior ITAT ruling that additional depreciation could be claimed in subsequent years if the machinery was used for less than 180 days in the first year. The ITAT found no error in the CIT(A)'s decision and dismissed the revenue's appeal. 3. Deleting the disallowance of additional depreciation on Milk Cans & Equipment of ?40,36,716: The Assessing Officer disallowed additional depreciation on milk cans and equipment, arguing that they did not qualify as plant and machinery. The CIT(A) allowed the appeal, referencing a prior ITAT decision that milk cans and equipment used in the business were considered plant and machinery for depreciation purposes. The ITAT upheld the CIT(A)'s decision, noting that there was no distinction between normal and additional depreciation for such items. The ITAT dismissed the revenue's appeal, affirming that the items qualified for additional depreciation. 4. Cross Objection regarding the interest charged under Section 234A of ?4,71,300: The assessee filed a cross objection against the interest charged under Section 234A, arguing that the return was filed within the due date. The ITAT noted that the issue required verification by the Assessing Officer and restored the matter for fresh examination. The cross objection was allowed for statistical purposes, directing the Assessing Officer to verify the return filing date and decide accordingly. Conclusion: Both appeals filed by the revenue were dismissed, and the cross objection filed by the assessee was allowed for statistical purposes. The ITAT upheld the CIT(A)'s decisions on all grounds, affirming that the assessee was entitled to the claimed exemptions and additional depreciation. The interest charge issue was remanded to the Assessing Officer for verification.
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