9911796707
TMI Blog2023 (6) TMI 769X X X X Extracts X X X X X X X X Extracts X X X X ..... er section 32(1)(iia)) as additions depreciation during the current year - HELD THAT:- Hon ble Karnataka High Court Rittal India (P) Ltd. [ 2016 (1) TMI 81 - KARNATAKA HIGH COURT ] held that if the plant and machinery eligible for additional depreciation u/s 32(1)(iia) are put to use for less than 180 days in said financial year and, therefore, only 50% of additional depreciation can be claimed in that year, balance 50% can be availed in the subsequent year. No infirmity in the impugned order passed by the learned CIT(A) on this issue. As a result, ground no.2 raised in Revenue s appeal is dismissed. - ITA no.597/Mum./2023 - - - Dated:- 15-6-2023 - Shri Amarjit Singh, Accountant Member And Shri Sandeep Singh Karhail, Judicial Member For the Assessee : Shri Yogesh Thar a/w Ms. Hiloni Shah For the Revenue : Dr. Kishore Dhule ORDER PER SANDEEP SINGH KARHAIL, J.M. The present appeal has been filed by the Revenue challenging the impugned order dated 30/12/2022 passed under section 250 of the Income Tax Act, 1961 ( the Act ) by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [ learned CIT(A) ], for the assessment year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent expenses under the head other expenses . The assessee was asked to explain as to how the said expenses are allowable. In response thereto, the assessee submitted that the expenditure incurred on community development in and around the surrounding villages of the Plant is for the purpose of the business of the assessee and therefore is an allowable expenditure. The Assessing Officer ( AO ) vide order dated 26/12/2016, did not agree with the submissions of the assessee and held that expenditure is not incurred wholly and exclusively for the purpose of business. The learned CIT(A), vide impugned order, allowed the appeal filed by the assessee and deleted the addition made by the AO on this issue. Being aggrieved, the Revenue is in appeal before us. 5. We have considered the submissions of both sides and perused the material available on record. The assessee is incorporated with the main object of development and implementation of coal-based thermal power project in Waroa Taluka, Chandrapur District of Maharashtra. The assessee, during the year under consideration, debited an amount of Rs. 2,43,98,882, as community development and welfare expenses in its profit and loss account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,063 13. Cbec- A/C Service Tax 32,822 14. Regrouping of expenses (1,601,288) Total: 6,128,827 6. In addition to the above, the assessee also incurred an amount of Rs. 1,82,70,055 on environment health and safety expenses, the details of which are as under:- Sl. No. Particulars Amount in Rupees B Environment Health and Safety expenses 1. ASN Pest Control Services 24,806 2. Balaji Medical And General Stores 29,574 3. Bharat Nursery - Carpet grass development work and other plantation 443,000 4. Cbec- A/C Service Tax 267,064 5. Deotale Diagnostic Centre 21,600 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Amublance hire charges 633,000 27. Varsha R. Potdar 62,080 28. Vinod Gaydhar 18,476 29. Others 1,741,963 Total: 18,270,055 Grand Total 24,398,882 7. We find that the AO, vide assessment order, did not dispute the fact that the expenditures have been incurred for the purpose of community development, and environment health safety expenses. As is evident from the record, the AO disallowed the expenditure merely on the basis that the said expenditure are not incurred wholly and exclusively for the purpose of business. In this regard, it is pertinent to note that vide Finance (No.2) Act, 2014, w.e.f. 01/04/2015, Explanation-2 was inserted in section 37(1) of the Act, whereby expenses incurred on the activities relating to corporate social responsibility are specifically excluded from the purview of section 37(1) of the Act. Since the year under conside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... additional depreciation in any subsequent assessment year. Accordingly, the AO disallowed the claim of additional depreciation of Rs. 200,80,07,557, and added the same to the total income of the assessee. The learned CIT(A), vide impugned order, deleted the addition made by the AO and granted the balance additional depreciation claimed by the assessee in the year under consideration. Being aggrieved, the Revenue is in appeal before us. 10. We have considered the submissions of both sides and perused the material available on record. In the present case, the assessee capitalised plant and machinery pertaining to Unit-1 (300 MW) and others aggregating to Rs. 2008,00,75,571, on 19/03/2013, (i.e. the assessment year 2013-14). In the assessment year 2013-14, the assessee has claimed additional depreciation @10% (i.e. 50% of the applicable rate of 20% as per section 32(1)(iia)), since the plant and machinery were put to use for less than 180 days. In the year under consideration, the assessee claimed the balance 10% of additional depreciation on the amount. We find that in CIT v/s Rittal India (P) Ltd, [2016] 380 ITR 423 (Karn.), the following substantial questions of law came up for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... putting it to use for the purpose of business. The proviso to Clause (ii) of the said Section makes it clear that only 50% of the 20% would be allowable, if the new plant and machinery so acquired is put to use for less than 180 days in a financial year. However, it nowhere restricts that the balance 10% would not be allowed to be claimed by the assessee in the next assessment year. 9. The language used in Clause (iia) of the said Section clearly provides that a further sum equal to 20% of the actual cost of such machinery or plant shall be allowed as deduction under Clause (ii) . The word shall used in the said Clause is very significant. The benefit which is to be granted is 20% additional depreciation. By virtue of the proviso referred to above, only 10% can be claimed in one year, if plant and machinery is put to use for less than 180 days in the said financial year. This would necessarily mean that the balance 10% additional deduction can be availed in the subsequent assessment year, otherwise the very purpose of insertion of Clause (iia) would be defeated because it provides for 20% deduction which shall be allowed. 10. It has been consistently held by this Court ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
