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TMI Blog2017 (3) TMI 812X X X X Extracts X X X X X X X X Extracts X X X X ..... reverse the order of ld CIT(A). Hence, this ground of appeal raised by the Revenue is allowed. Additional depreciation - AO has disallowed the additional depreciation on the ground that the assessee failed to provide the requisite documents in support of his claim of additional deposition - Held that:- It is nowhere clear what was the manufacturing activity of the assessee and whether it was actually engaged in some manufacturing activity or not as required under the Act. It is because on perusal of Tax Audit Report of the assessee in form number 3CD we find that the assessee has mentioned its nature of the business as under :- “Chain of retail showrooms dealing in wide variety of retail merchandise etc.” In view of above, we find that the issue of additional deposition has not been examined by the AO and therefore the same needs to be examined again in the light of above stated facts. Therefore we are inclined to restore this issue to the file of AO for fresh adjudication in accordance with the law. Hence, this ground of appeal of the assessee is allowed for the statistical purposes. - I.T. A. No. 2627/Kol/2013 - - - Dated:- 15-3-2017 - SRI ABY T.VARKEY, JUDICIAL MEMBE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rving as under: I have carefully considered the assessment order, paper book and written submissions filed by the appellant. The AO has disallowed ₹ 13,54,945/- u/s. 43B of IT Act on the ground that the appellant has not paid ESSI, PF VAT during the year. However, it is seen that the AO has misinterpreted the facts of the case. The said amount of ₹ 13,54,945/- has not been debited in the accounts of the instant year. In fact, in Annexure E of Tax Audit Report (Page 189 of Paper Book) it is mentioned that the aid amount represents sum which was not allowed in the earlier years. The said clause is intended to allow in the instant year, the disallowances made in the preceding years, if the relevant amount has been paid in the instant year. The amount of ₹ 13,54,945/- represent amount disallowed in earlier years and which was not paid in the instant year and hence cannot be allowed. However, in disallowing the said sum again is clearly a mistake and was not warranted. The appellant has also submitted relevant extracts of Tax Audit Reports and assessment orders of AY 2007-08 and A.Y 2008-09, which also clearly substantiates the assessee contention the said sum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act. 10. The assessee has claimed interest expenses for ₹ 9,75,16,996/- on unsecured debentures in its profit loss account. But the payment for the same was not made within the time as stipulated u/s43B of the Act. On question by the AO about the non-payment of interest, the assessee submitted that the time for the payment for the impugned interest was extended for another 2 years which is ending on 31.03.2011. However, the AO disregarded the contention of the assessee on the ground that no evidence for such deferment was submitted. As such the AO disallowed the interest of ₹ 9,75,16,996/- and added to the total income of the assessee. 11. Aggrieved the assessee preferred an appeal before the Ld. CIT(A). The assessee before the Ld. CIT(A) submitted that the interest on un-secured debentures from LIC Mutual Funds is not covered within the clause (d) (e) of Section 43B of the Act. Therefore, the disallowance of interest by virtue of provisions of Section 43B is not warranted. The Ld. CIT(A) considering the submissions of the assessee reversed the order of the AO by observing as under: Thus, clause (d) and (e) of aforesaid section, if applicable on interes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #8377; 9,75,16,996/- being interest provision on LIC Mutual Fund made in the accounts, as per section 43B of Income Tax Act and therefore the impugned disallowance made by the AO is hereby deleted. Thus, this ground of appeal is allowed in favour of the appellant company. Being aggrieved by the order of the Ld. CIT(A), the Revenue is in appeal before us on the following ground of appeal: 2. Whether the Ld. CIT(A)-XII, Kolkata, was justified on a comprehensive note with subtle interpretation differentiates the entities of a Mutual Fund and Public Financial Institution and thus concluded that the interest payment to LIC Mutual Fund does not come under the purview of Section 43B of I.T. Act ? 12. The ld. DR before us submitted that the LIC mutual fund is a public financial institutions as a specified under section 4 of SEBI (disclose and investor protection) clause guidelines 2000. The ld DR in support of his claim has also submitted the copy of the order of Central Information Commission (CIC for short) wherein the CIC in complaint No. CIC/AT/C/2007/0216, 365, 462, 498,540,511 and complaint numbers CIC/AT/C/2008/ 172,342,655,487, Appeal No.CIC/AT/2007/0735,729,1370 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orporation of India, established under section 3 of the Life Insurance Corporation Act, 1956 (31 of 1956); (v) The Unit Trust of India, established under section 3 of the Unit Trust of India Act, 1963 (52 of 1963); (vi) The Infrastructure Development Finance Company Limited, a company formed and registered under the Act;] A plain reading of the above provision reveals that the Life Insurance Corporation of India comes within the ambit for public financial institution. The name of LIC mutual fund is not appearing in the definition of public financial institution as defined u/s 4A of the Companies Act, 1956. However, the fact that the LIC mutual fund is an arm of the Life Insurance Corporation of India cannot be ignored. When the Life Insurance Corporation of India is covered under the definition of public financial institution being a parent company then also the same analogy shall be extended to the arm of it. Hence, we are of the view that the definition of public financial institution should also cover the LIC mutual fund being an arm of Life Insurance Corporation of India. It is also important to note that LIC mutual fund was established on 20th April 1989 b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s from time to time. The corpus of the Trust amounting to ₹ 10 lakhs was contributed by the LIC. The Trust Deed provides that a further sum not exceeding ₹ 25 crores shall be made available as initial contribution to the Trust by the LIC. The LIC has floated the Mutual Fund to mop up the additional savings from the public in rural and semi-urban areas and it would be receiving considerable amount of insurance business from the Mutual Fund. LIC of India for the above purpose provides to the Mutual Fund all suitable help and guidance which includes payment of initial corpus of the Trust, financial assistance to the Trust, renting out premises after housing the Mutual Fund, provision of initial office equipment and deputation of suitable employees etc. the Chairman of LIC is authorized to take such administrative decisions as may be required periodically so as to ensure the smooth launching of the LIC Mutual Fund and its successful operation. 39. Now coming to GIC Housing Finance Limited, the Commission s finding is not any different. The shareholding of six Public Authorities in GIC Housing Finance is 47.68% and coupled with the control they exercise over the GIC Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is evident from the above that during the instant year the appellant has claimed additional depreciation on assets installed at Factory s well as Showrooms. However, as per section 32(iia) of the Income Tax Act additional depreciation is available when the plant and machinery were not installed at any office premises or any residential accommodation, including accommodation in the nature of a guest-house. It is allowable only on plant machinery used for the manufacturing process. Thus, in view of the above, I am of the opinion that the appellant is not eligible to claim additional depreciation on assets installed at showroom amounting to ₹ 2,49,34,785/-. Thus, considering the aforesaid facts of the case and applicable laws, I direct the AO to restrict the disallowance to ₹ 2,49,34,785/- instead of ₹ 2,89,58,125/- as made by th AO in the assessment order. Therefore, this ground of appeal is partly allowed. Being aggrieved by the order of the Ld. CIT(A), the Revenue is in appeal before us on the following grounds of appeal: Whether Ld. CIT(A)-XII, Kolkata, was justified in restricting the additional depreciation to ₹ 24,934,785/- as made by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (D) any machinery or plant, the whole of the actual cost of which is allowed as a 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 one previous year;] A plain reading of the above provisions reveals that the additional depreciation is available to the assessee who is engaged in the business of manufacturing or production of any article or thing. It is not necessary that the machine should be utilized only in the manufacture or production of any article or thing. The AO has disallowed the additional depreciation on the ground that the assessee failed to provide the requisite documents in support of his claim of additional deposition. However the learned CIT(A) has given relief to the assessee in part without calling remand report from the AO which is in contravention to the provisions of Rules 46A of Income Tax Rules, 1962. It is nowhere clear what was the manufacturing activity of the assessee and whether it was actually engaged in some manufacturing activity or not as required under the Act. It is because on perusal of Tax Audit Report of the assessee in f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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