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TMI Blog2019 (9) TMI 298X X X X Extracts X X X X X X X X Extracts X X X X ..... i). The learned Sr. Departmental Representative has not made any argument on the above facts. Hence, we direct the AO to compute the disallowance accordingly. This issue of assessee s appeal is partly allowed and that of the Revenue is dismissed. - ITA No. 6224/Mum/2017, ITA No. 6292/Mum/2017 And ITA No. 693/Mum/2019 - - - Dated:- 21-8-2019 - SRI MAHAVIR SINGH, JM AND SRI MANOJ KUMAR AGGARWAL, AM For The Appellant : Shri Bharti Singh, DR For The Respondent : Shri Niraj Sheth, AR ORDER PER MAHAVIR SINGH, JM: These two appeals of assessee and one appeal of Revenue are arising out of the order of the Commissioner of Income Tax (Appeals)]-3, Mumbai [in short CIT(A)], in appeal No. CIT(A)-3/IT-128/ACIT-2(1)(1)/16-17 vide dated 07.07.2017. The Assessment was framed by the Asst. Commissioner of Income Tax, Circle 2(1)(1) Mumbai (in short ITO/ AO) for the A.Y. 2012-13 vide order dated 20.03.2015 under section 143(3) of the Income-tax Act, 1961 (hereinafter the Act ). 2. The first issue in this appeal of assessee in ITA No. 6292/Mum/2017, is against the order of CIT(A) co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase from HPFS during the FY 2010-11 relevant to AY 2011-12 for a period of 36 days. As per Accounting Standard 19 (AS-19), the assessee has capitalized the asset and interest on lease payment has been debited to the profit and loss account and claimed depreciation as under: - Cost of Asset capitalized on 15.04.2010 ₹ 25,00,00,000 Less: Depreciation @ 60 for FY 2010-11 ₹ 15,00,00,000 WDV as on 01.04.2011 ₹ 10,00,00,000 Less: Depreciation @ 60 for FY 2011-12 ₹ 6,00,00,000 WDV s on 01.04.2012 ₹ 4,00,00,000 5. According to AO, HPFS also claimed depreciation on the said asset given on financial lease and according to AO once two persons claiming to be the owner of the asset, the claim of depreciation cannot be allowed to the assessee. Aggrieved, assessee preferred the appeal before CIT(A). The CIT(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 25,00,00,000 Less: Deprecation @60% for AY 2011-12 15,00,00,000 Depreciation allowed by assessing Officer WDV as on 01.04.2011 10,00,00,000 Less : Depreciation @ 60% for AY 2012-13 6,00,00,000 Deprecation NOT allowed by assessing officer WDV as on 01.04.2012 4,00,00,000 Less : Depreciation @ 60% for AY 2013-14 2,40,00,000 Depreciation allowed by assessing Officer WDV as on 01.04.2013 1,60,00,000 Less : Depreciation @ 60% for AY 2014-15 96,00,000 Deprecation NOT allowed by assessing officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly user of the server. In term of the above facts, the assessee claim depreciation on the WDV at the rate applicable to fixed assets. It was claimed that the assessee company has not claimed any amount of revenue expenditure except interest paid to HPFS amounting to ₹ 1,03,70,798/- and this was claimed under the head of finance cost. We noted that the AO has disallowed depreciation of ₹ 6 crores on the ground that HPFS has claimed depreciation on the said asset not only in this year but in subsequent years. The assessee before us explained that the Income Tax Department for AY 2009-10 has already disallowed the claim of depreciation in the hands of the HPFS. We noted that in the very first year i.e. AY 2011-12, the depreciation has already allowed the claim of depreciation. We noted that in the income tax code, there is a provision/ concept of block of asset and once any asset enters into block asset and claim of depreciation in very first year is allowed, in subsequent year the deprecation cannot be disallowed in case the first year is not disturbed. We noted that even in subsequent years, the Revenue is allowing the claim of the assessee as noted in above chart. Hence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10. Briefly stated facts are that the assessee company has earned exempt income in the form of dividend and interest on interest fee bonds deposit amounting to ₹ 18.86 crores on units of mutual funds and tax free bonds and claim the same as exempt under section 10(34) and 10(35) of the Act. The assessee has made suo moto disallowance of expenses relatable to exempt income under section 14A read with Rule 8D of the Rules amounting to ₹ 40,13,000/-. The AO noted that the said suo moto disallowance made by assessee, is not as per Rule 8D of the IT Rules and thereby, he invoked the provisions of section 14A read with Rule 8D of the Rules and made disallowance under Rule 8D(2)(i) at ₹ 18,68,443/- and under Rule 8D(2)(iii) being half percent of average value of investment at ₹ 7,40,54,295/-. Thereby, the AO worked out the disallowance of expenses at ₹ 7,59,22,738/-. The AO after allowing the suo moto disallowance made by the assessee, made balance disallowance at ₹ 7,19,09,738/-. Aggrieved, assessee preferred the appeal before CIT(A). The CIT(A) restricted the disallowance at ₹ 43,87,355/- by observing in Para 6.3 as under: - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Allocation Total area occupied by the appellant company in square feet 88350 sq feet Total area occupied by the Treasury section 100 sq. feet Indirect expenses allocated to Treasury section (1,89,45,31,557X100/ 88,350) 21,44,348/- Total amount inadmissible under section 14A 40,12,791/- Rounded off to 40,13,000/- 12. When these facts were confronted to the learned Counsel for the assessee, he fairly agreed that the disallowance can be restricted to the extent of ₹ 21,44,348/- under Rule 8D(2)(iii). The learned Sr. Departmental Representativ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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