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TMI Blog2023 (3) TMI 348X X X X Extracts X X X X X X X X Extracts X X X X ..... nds partly allowed for statistical purposes. Allowance of balance of additional depreciation - asset was not put to use for less than 180 days - HELD THAT:- This issue is no longer res integra as it was decided by the Hon ble Jurisdictional High Court in the case of PCIT vs. M/s. Godrej Industries Ltd. [ 2018 (12) TMI 64 - BOMBAY HIGH COURT] following the decision CIT vs. Rittal India Pvt. Ltd. [ 2016 (1) TMI 81 - KARNATAKA HIGH COURT] and case of CIT vs. Shri T. P. Textiles Pvt. Ltd. [ 2017 (3) TMI 739 - MADRAS HIGH COURT] and also the legislative amendment has been brought by inserting third proviso to clause (ii) of sub-section (1) of section 32 of the Act allowing the benefit of balance of 50% of depreciation in the subsequent year in such situation. Respectfully, following the above legal positions, this ground of appeal no.3 stands allowed in favour of the assessee company. Subsidy received from Government of Maharashtra under Package Scheme of Incentive, 2007 to be reduced from the actual cost of asset in terms of Explanation 10 to section 43(1) - HELD THAT:- This issue stands covered in favour of the assessee company by the decision of the Co-ordinate Bench of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 1962 ( the Rules ). The ld. CIT(A) ought to have appreciated the fact that the provisions of subsection (2) of section 14A of the Act could be invoked only if the ld. AO, having regard to the accounts of the assessee, was not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under the Act. The ld. AO has not brought on record dissatisfaction about the reasonableness of indirect expenses disallowed by the appellant in the return of income u/s 14A of the Act. 2. Without prejudice to the Ground No. 1, the ld. CIT(A) has erred in law and on facts in not reducing the amount of strategic investments from the average value of investments while calculating disallowance under Rule 8D(2)(iii) of the Rules. [Amount of disallowance of expenses - Rs.25,59,498/-] 3. The ld. CIT(A) has erred in law in confirming disallowance of the claim of additional depreciation of Rs. 15,64,711/- to the extent of 50% in respect of plant machineries acquired and installed in immediately preceding financial year 2012-13 for less than 180 days. 4. The ld. CIT(A) has erred in law and on fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5. Being aggrieved by the above disallowances, an appeal was filed before the ld. CIT(A), who vide impugned order confirmed addition u/s 14A and also confirmed the disallowance of claim for allowance of balance of additional depreciation in the subsequent assessment year. However, the ld. CIT(A) held that the subsidy received by the appellant company from the Government of Maharashtra under Package Scheme of Incentive, 2007 is capital in nature, but directed the Assessing Officer to reduce the same from the actual cost of the depreciable asset for the purpose of allowing the depreciation. The ld. CIT(A) also confirmed the addition on account of amortization of leasehold premium paid. 6. Being aggrieved by the decision of the ld. CIT(A), the appellant is in appeal before us in the present appeal. 7. Ground of appeal no.1 was not pressed during the course of hearing of appeal, same stands dismissed as not pressed 8. Ground of appeal no.2 challenges the methodology of computation of disallowance u/s 14A r.w. Rule 8D(2)(iii). We find merit in the contention the appellant that for the purpose of computation of amount of disallowance under Rule 8D(2)(iii), the value o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITO vs. Shriniwas Engineering Auto Components Pvt. Ltd. vide ITA No.2992/PUN/2017 for A.Y. 2014-15 decided on 27.04.2022, wherein, it was held as under :- 10. We heard the rival submissions and perused the material on record. We have carefully gone through the Package Scheme of Incentives, 2007, the preamble of the scheme, extracted above, clearly indicates the intention behind grant of subsidy was to encourage the setting up the new industries in under developed region in the State of Maharashtra. Indisputably, it is not the case of the Assessing Officer that the subsidy is revenue in nature, as the Assessing Officer himself had invoked the provisions of Explanation 10 to section 43(1) of the Act. Therefore, the issue that arises for our consideration in the present appeal is whether the amount of subsidy received from the Government of Maharashtra shall go to reduce the actual costs of assets u/s 43(1) for the purpose of allowing the depreciation u/s 32 of Act. No doubt, the subsidy was granted in terms of the certain percentage of fixed assets to be disbursed in the form of refund of octroi, electricity duty exemption, entry tax refund, VAT etc. over a period of 8 years. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t or reimbursement cannot be directly relatable to the assets acquired by an assessee. In such a situation, the Proviso envisages that so much of amount which bears to the total subsidy, reimbursement or grant, the proportion as such assets bears to all the assets in respect of or with reference to which subsidy or grant is so received shall be deducted in the actual cost of the asset of the assessee. Thus, the proviso envisages adjustment of subsidy in the assets of the assessee. In case the subsidy grant is not directly relatable to particular asset. Since in the preceding paras we held that the provisions of Explanation 10 to section 43(1) have no application to the facts of the present case, the question of applicability of Proviso does not arise. In the light of the above, we hold that the amount of subsidy is not to be deducted from the actual cost u/s 43(1) for the purpose of calculation of depreciation and the provisions to Explanation 10 to section 43(1) have no application to the facts of the present case. We are forfeited in taking this view by the decision of the Hon ble Bombay High Court in the case of Welspun Steel Ltd. cited supra. This decision being that of Jurisdi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 challenges the decision of the ld. CIT(A) in confirming the disallowance of amount of Rs.24,33,339/- towards amortization of leasehold premium paid in respect of land acquired from Gujarat Power Corporation Limited, Gujarat for Solar Project on leasehold basis. The facts of the claim are as under : During the financial years 2011-12 and 2012-13, the assessee company acquired on leasehold 1,52,981 sq.mtr. land situated at Gujarat Solar Park from Gujarat Power Corporation Limited ( GPCL ) for a sum of Rs.5,07,73,072/- and land development charges of Rs.2,14,86,181/- for a total period of 30 years. Under the said agreement, the appellant is required to pay a very nominal annual rent @ Rs.1 per sq.mtr (i.e. Rs.1,52,981/-) to GPCL. The appellant also claimed amortization of expenses of Rs.26,33,339/- on leasehold land taken for windmill solar project based on the tenure of lease agreement. The Assessing Officer was of the opinion that amortization of lease premium cannot be allowed as revenue expenditure , as it is of enduring nature. Even on appeal before the ld. CIT(A), the same was confirmed. 13. Being aggrieved, the appellant is in appeal before us in the present ground o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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