9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2023 (8) TMI 1177 - AT - Income TaxDeduction u/s 32AC - Investment in new plant or machinery - HELD THAT - In the taxing statute there is no scope for intendment and if the language is simple plain unambiguous and clear the same has to be applied howsoever harsh the consequences may be. There is no equity in taxing statute and literal rule of interpretation is to be followed if there is not ambiguity in the provisions and is in simple clear and plain language. Thus as could be seen from clause(v) of sub-section (4) of Section 32AC the new asset shall not include any plant or machinery the whole of the actual cost of which is allowed as deduction (whether by way of depreciation or otherwise) in computing the income chargeable under the head Profits and gains of business or profession of any previous year. Thus in the instant case Pollution Control Equipment s admittedly carry prescribed rate of depreciation @100% and hence the entire actual cost of Pollution Control Equipment s is deductible while computing income chargeable to tax under the head Profits and gains of business or profession of any previous year. It is merely because the aforesaid Pollution Control Equipment s were acquired and installed after 30th September 2013 and were put to use for less than 180 days during the year under consideration the depreciation allowed shall be 50% in the year under consideration while the remaining 50% depreciation shall be allowed in the subsequent assessment year but the facts remains which cannot be negated is that the whole of the actual cost of Pollution Control Equipment s is deducted at the prescribed rate of depreciation @100% and is hit by clause (v) sub-section (4) of Section 32AC and shall be ineligible for claim of deduction u/s 32AC. The assessee if it meets all other conditions for grant of deduction u/s 32AC shall be allowed deduction u/s 32AC in the subsequent year for which the assessee has to meet all the statutory requirements as mandated by Section 32AC and the onus is entirely on the assessee to demonstrate and prove with evidence before the AO that it is eligible and entitled for deduction u/s 32AC in the immediately succeeding year as it meets all the conditions as are prescribed u/s 32AC. Assessee submitted that the assessee did not claim deduction u/s 32AC in the return of income filed for immediately succeeding assessment year as the claim was made in the return of income filed for current assessment year. Be it as it may be if the assessee meets all the stipulated conditions as are prescribed u/s 32AC for immediately succeeding assessment year for which onus is entirely on the assessee to demonstrate and prove by evidence before the AO that it is eligible and entitled for deduction u/s 32AC the AO is directed to consider the claim of the assessee for deduction u/s 32AC for immediately succeeding year viz. ay 2015-16 on merits in accordance with law. Reference is drawn to CBDT circular No. 14 of 1955 dated 11.04.1955. The grounds of appeal numbers 1 to 5 are partly allowed in the manner indicated above. Disallowance u/s 14A r.w.s 8D - HELD THAT - We are principally in agreement with assessee that in case if the investments are made out of mixed use funds the presumption shall apply that the assessee has used its own interest free funds available for making investments in the securities/mutual funds provided the own interest free funds are sufficient to cover the aforesaid investments but complete facts are not there on record as audited financial statements for relevant period are not filed but are filed for subsequent financial year i.e. 2014-15 and thus for limited purposes we are remitting the matter back to the file of the AO for verification of this aspect and if it is found that own interest free funds are sufficient to cover investments made in securities/mutual funds no disallowance of interest expenses shall be made as it will be presumed that the assessee has invested its own interest free funds for making investment in securities/mutual funds. The assessee is directed to file relevant records with the AO. So far as disallowance of administrative expenses by authorities below by invoking provisions of Section 14A read with Rule 8D(2)(iii) is concerned no serious contentions were raised by the ld. Counsels for the assessee. As in assessee s own case has confirmed the additions made by authorities below by disallowing administrative expenses by invoking provisions of Section 14A read with Rule 8D(2)(iii) of the 1962 Rules.
Issues Involved:
1. Disallowance of deduction claimed under Section 32AC of the Income-tax Act, 1961. 2. Disallowance under Section 14A read with Rule 8D of the Income-tax Rules, 1962 for interest and administrative expenses. Summary: Issue 1: Disallowance of Deduction Under Section 32AC The assessee company filed an appeal against the disallowance of Rs. 16,08,70,789/- claimed under Section 32AC of the Income-tax Act, 1961. The Assessing Officer (AO) observed that the total additions to fixed assets were Rs. 151,64,97,046/-, but after excluding ineligible assets such as Factory Building, Vehicles, Office Equipment, Computers, Furniture, and Pollution Control Equipment (which allows 100% depreciation), the remaining investment in new plant and machinery was Rs. 96,46,85,197/-, which is below the Rs. 100 crore threshold required for Section 32AC deduction. The assessee contended that Pollution Control Equipment, although eligible for 100% depreciation, was put to use for less than 180 days, and only 50% depreciation was claimed. Therefore, the remaining 50% should be considered for Section 32AC benefits. The AO rejected this argument, stating that the whole cost of Pollution Control Equipment is deductible and thus ineligible under Section 32AC. The Tribunal upheld the AO's decision, emphasizing that the entire cost of Pollution Control Equipment, which carries a 100% depreciation rate, should be excluded from the new assets calculation for Section 32AC. The Tribunal also noted that the law does not require the whole cost to be deducted in one year but in "any previous year." Therefore, the assessee's aggregate investment did not meet the Rs. 100 crore threshold, making it ineligible for Section 32AC deduction. However, the Tribunal allowed the assessee to claim the deduction in the subsequent year if all conditions under Section 32AC are met, directing the AO to verify the claim for the next assessment year. Issue 2: Disallowance Under Section 14A Read with Rule 8D The AO disallowed Rs. 32,11,000/- under Section 14A read with Rule 8D for interest and administrative expenses related to exempt income. The assessee argued that no fresh investments were made during the year, and the investments were from interest-free funds. The AO, however, observed mixed-use funds and made disallowances. The Tribunal remitted the matter back to the AO for verification, directing that if the assessee's interest-free funds are sufficient to cover the investments, no interest expense disallowance should be made. The Tribunal upheld the disallowance of administrative expenses, as no serious contentions were raised by the assessee. Conclusion: The appeal was partly allowed, with directions for the AO to verify the eligibility for Section 32AC deduction in the subsequent year and to reassess the interest expense disallowance under Section 14A based on the sufficiency of interest-free funds. The disallowance of administrative expenses under Section 14A was upheld.
|
