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TMI Blog2023 (8) TMI 967X X X X Extracts X X X X X X X X Extracts X X X X ..... the appeal. For the sake of convenience, the same are extracted hereafter: "2.1 Whether Ld. ITAT erred in law in failing to appreciate that once the Assessee had omitted to claim deduction of Rs. 3,46,32,282/- under Section 35 of the Act, in the return of income, the deduction could only be claimed by filing revised return before the Ld. AO? 2.2 Whether the Ld. ITAT erred in law, qua disallowance of Rs. 3,46,32,282/- under Section 35 of the Act, by holding that the Assessee even after omitting to claim deduction in the return of income, can claim such deduction before the Ld. AO even without filing revised return? 2.3 Whether the Ld. ITAT erred in law in holding that the claim of the Assessee under Section 35 of the Act was allowable in law, as no argument was raised by the Revenue qua non-fulfillment of the conditions contained under sub-section (2) thereof [sic] when as a matter of fact no deduction was claimed by the Assessee under Section 35 of the Act in the return of income?" 4. The Assessing Officer (AO), via assessment order dated 25.02.2013, has disallowed the claim made by the petitioner under Section 35 of the Income Tax Act, 1961 [in short, "Act"], as according ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cipal Commissioner of Income Tax (PCIT). This affidavit is dated 31.10.2018. 10. Via this affidavit, the affiant has placed on record what he claims was the ROI filed by the petitioner. This document is marked as Annexure-A. 11. Interestingly, in this affidavit, the affiant clearly admits that the Annexure-II appended to the appeal, which was claimed to be the ROI filed by the petitioner, was not lodged with the appeal preferred by the appellant/revenue with the Tribunal. 12. Annexure-II appended to the appeal, is the same as Annexure-A which is attached to the PCIT's affidavit dated 31.10.2018. 13. Therefore, the moot question which arises for our consideration is whether Annexure-II/Annexure-A, which is appended to the PCIT's affidavit, was the ROI said to have been filed by the respondent/assessee. 14. We may note that the respondent/assessee has also filed a affidavit-in -reply dated 14.0.2019. 15. This affidavit has been filed by one Mr Sanjeev Saxena. The affidavit is accompanied by a document, which the affiant claims is the copy of the ROI (i.e., ITR-6) downloaded from the designated website. 16. The stand of the respondent/assessee is, thus, that the document which i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 4,18,70,038/-. However, a request has been made to the CPC, to provide a copy of intimation u/s 143(). As per the assessee, the assessee has intimated that it would move rectification for the CPC Bangalore. A copy of the return generated from the ITD Systems reveals that the total income has been returned shown at Rs. 7,65,02,320/- and order u/s 143(1) was passed on 07.07.2011 at the same income. Thus, it is seen that the assessee had not claimed deduction u/s 35 of the Income Tax Act in the return of income. Hence, deduction u/s 35 is not allowed and the income of the assessee from business & profession is considered at Rs. 7,65,02,320/- as intimated to the assessee vide this officer letter dated 1.01.203 refer to above". [Emphasis is ours] 22. Clearly, after making the observations in the second paragraph that the respondent/assessee had claimed a deduction under Section 35 of the Act, the AO went on deny the deduction because of what was perhaps noted by the CPC while forwarding an intimation under Section 143(1) of the Act. 23. This, however, was corrected by the CIT(A) via order dated 14.08.2013. 24. For the sake of convenience paragraph 4 of the said order is extract ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ience and Technology vide letter dated 17.09.2009 for in house research and development unit at Pune. According to the provisions of section 35(l)(iv) the assessee is eligible for deduction of capital expenditure on research and development related to the business, carried on by the assessee if it satisfies the condition laid down in sub-section 2of section 35 of the Act. No argument is raised by revenue that assessee has not fulfilled those conditions. In the result we find no infirmity in the order of, the Id CIT(A) in granting deduction of Rs. 34632282/- to the assessee on account of capital expenditure on research and development. In the result ground No. 1 of the appeal is dismissed. [Emphasis is ours] 26. Thus, having regard to the record, and the affidavit of the PCIT dated 31.10.2018, we are of the opinion, as noted above, that the weight of the evidence which was placed before the CIT(A) and the Tribunal is clearly in favour of the respondent/assessee. We find no reason to interfere with the impugned order. 27. The appeal is accordingly closed, with regard to the aforementioned issues. 28. Although Mr Aggarwal's submissions started with this aspect of the matter, at t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT Vs. Rentax Industries ITA No. 315/Rjt/2013, AY 2010-11 dated 08.10.2015 wherein, the impact of the withdrawal of the circular was considered and disallowance u/s 40a(i) on account of commission expenditure to foreign agent was deleted relying upon the decision of Hon'ble Madras High Court in case of CIT Vs. Orient Express 230 Taxmann 602. The another decision cited before us of coordinate bench in ITA No. 636/Lkw/2013 AY 2010-11 dated 18.06.2015 is also on deletion of disallowance of commission expenditure for non-deduction of tax at source to foreign agent after withdrawal of the above circular. We are also of the view that withdrawal of the circular cannot bring any change in the provision of section 5, 9 and 195 of the income tax act which determined the chargeability of any income in the hands of a non-resident. No material has been brought on record by revenue to show that income of the nonresident has accrued, or deemed to have accrued in India and therefore that income is chargeable to tax in the hands of Nonresident as per the Income tax Act.- In absence of this finding provision of section 195 of the act are not triggered. Therefore, in view of the above decision o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble to tax in hands of assessee on this mismatch, then only it can result in to any addition. In the present case Id AO believed the AIR information as sacrosanct and made, the addition which is correctly deleted by Id CIT (A). In view of this we do not find any infirmity in the order of the Id CIT (A) in deleting the above addition. Therefore ground No. 4 of the appeal of the revenue is dismissed. [Emphasis is ours] 32. Likewise, insofar as the questions proposed in paragraphs 2.6 and 2.7 of the appeal are concerned, the Tribunal, in our opinion for good reason, has concluded that electric fittings were amenable to higher rate of depreciation, as they were part of plant and machinery, and not furniture and fixtures. This view was backed by a decision of the coordinate bench of this court in ITA 1266/2010, titled BSES Rajdhani Powers Ltd. 13. Ground No. 5 and 6 of the appeal are against the disallowance of depreciation of Rs. 262756/- on account of electrical fittings and of Rs. 154711/- claim on account of computer peripherals. X X X 15. We have carefully considered the rival contentions. The Id CIT{A) has dealt with above issue as under:- "7. Ground No, 4 This ground is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted that impugned Electrical Fittings are in fact electrical Installations for plant and machinery. This was so explained in letter placed at PB 6, to Ld. AO submitting that the impugned installations are in the nature of control penal, diesel tank, DG set and cost of its fitting, light fitting, water and compressed air pipes, M. V. Switch board, L. T. cables and terminations, compressor, etc. used for Plant and Machinery. This explanation of the appellant has not been denied or rebutted by Ld. AO as can be seen from the plain reading of the assessment order. Thus, when the facts say that these are plant and machinery, the appropriate rate of depreciation is 15% and not 10%." In view of the judicial pronouncements relied by the appellant the addition of Rs. 2,62,7567/- for electrical fittings and Rs. 1,54,711/- for projectors, batteries, printers and UPS is deleted." 16. Ld CIT(A) has correctly deleted the disallowance on account of depreciation on electrical fittings holding them part of the plant and machinery and not furniture and fixture as claimed by the Id AO. Further, depreciation on the computer peripherals was also allowed @60 %relying upon the decision of Hon'b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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