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TMI Blog2013 (12) TMI 1657X X X X Extracts X X X X X X X X Extracts X X X X ..... ty. - HELD THAT - It is undisputed that electrical items are fitted with projector and other film exhibition systems. Without electrical items, the projector as well as exhibition systems cannot be run. Thus, the assessee is entitled to higher rate @ 25%. - Decided in favor of assessee. Addition u/s. 40(a)(ia) on account of late payment of TDS- The assessee capitalized the various expenses but claimed depreciation at 2,86,448/- in the P L account. TDS on capitalised item paid on 30.05.2005 as against due date of 07.12.2004 - Appellant submitted that the entire TDS was paid on May 30, 2005 which is much before the due date of filing return. As per retrospective amendment by finance act 2008 the expense is allowable if TDS for the month of March is paid before due date of filing return. TDS in this case is prior to March 2005 and therefore amended provisions will not apply to the appellant - HELD THAT:-. Depreciation cannot be disallowed under section 40 (a) (ia) of IT act since it talks of expenditure by way of interest, commission, brokerages, fees for professional services. The assessee did not claim any expenditure under these heads. Therefore, provision of Section 40(a)(ia) is n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompliance of section 80I(7). Since the decision of jurisdictional high court is not yet reversed by Supreme Court, the same is binding on the appellate authorities. Appellant fulfils all other conditions required for claim under section 80IB. The rejection of claim was only on non-submission of audit report alongwith return of income and as such appellant is eligible for this claim. Respectfully following the decision of Gujarat High Court reported in 201 ITR 325 AO is directed to allow claim of deduction under Section 80IB." 4. Now the Revenue is before us. Ld. Sr. D.R. relied upon the order of the A.O. and argued that statutory requirement had not been fulfilled by the appellant. Therefore, he was rightly decided and disallowed the claim u/s.80IB at ₹ 6,95,585/-. At the outset, ld. A.R. argued that audit report was furnished before the A.O. at the time of assessment and Hon'ble Gujarat High Court in case of CIT vs. Gujarat Oil and Allied Industries, 201 ITR 325, has held that if the assessee filed the audit report before the A.O. at the time of assessment, he should allow the claim of 80IB. Ld. A.R. further argued that various High Courts also held this view that deduction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd 272 ITR 383 held that where a particular structure is merely helpful for carrying on the activities of the assessee it may not be a plant but if it is an integral part of plant and machinery or a portion of that building is an integral part of plant and machinery then that should be considered as plant in view of Supreme Court decision in the case of CIT versus Karnataka Power Corporation. Even ITAT Ahmedabad in the case of Marwar hotels Ltd held that Hotel Electrical fittings are eligible to depreciation as plant and machinery. Considering this, in appellant's case electrical fittings are essential part of film exhibition and not ancillary to its business. Respectfully following the decisions relied upon by the appellant and also of jurisdictional ITAT, it is held that electrical installation and equipments in the case of appellant are eligible for depreciation at the rate applicable for plant and machinery. The addition made by assessing officer is therefore deleted." 8. Now the Revenue is before us. Ld. Sr. D.R. relied upon the order of the A.O. and argued that as per Rule, on electric item depreciation is allowable @ 15%. Therefore, he requested to confirm the order of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the ground that TDS was not paid in time. Appellant submitted that the entire TDS was paid on May 30, 2005 which is much before the due date of filing return. As per retrospective amendment by finance act 2008 the expense is allowable if TDs for the month of March is paid before due date of filing return. TDS in this case is prior to March 2005 and therefore amended provisions will not apply to the appellant. Appellant's argument that depreciation cannot be disallowed under section 40 (a) (ia) of IT act since it talks of expenditure by way of interest, commission, brokerages, fees for professional services. There is no provision which prohibits appellant from capitalizing the assets where TDS was not paid. Since section 43 (1) decides actual cost and section 43 (6) decides written down value, allowance of depreciation is not covered under section 40 (a) (ia). Depreciation is to be allowed on the WDV which is defined in section 43 (6). In view of this, the payment of TDS in respect of capitalised item of expense is not relevant as far as issue of capitalisation is concerned Since the expense is capital and part of WDV of block of assets, depreciation on the same cannot be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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