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2016 (2) TMI 792 - AT - Income TaxAddition on account of excess depreciation claimed - asset put to use - Held that:- From the list of the machinery purchased by the assessee for the Baddi Unit, it reveals that the purchase of machinery was started from February, 2005 and production at Baddi unit was admittedly commenced from May, 2005 and therefore, no depreciation was claimed on the machinery installed at Baddi Unit for A.Y. 2005-06. It is also an admitted fact and evident that major part of machines at D-6 unit were shifted to Baddi Unit in the later part of the period. Therefore, without going into the question whether and which machines and for what value has been shifted from D-6 unit to Baddi unit during the year, the ld. CIT(A) has rightly observed that the assessee was entitled to claim full depreciation for the whole year, if the machinery has been used for more than 182 days. It is not the case of Revenue that the machines, on which depreciation was claimed by assessee were not put to use for more than 182 days or that the said machinery was not used for the purpose of business. In presence of these facts, we are inclined to sustain the findings of the ld. CIT(A) with respect to deletion of impugned addition. Addition on account of building improvement of 35 HPSIDC, Baddi and errection of machines - Held that:- It is notable that no material or evidence was seized in the search to demonstrate that the assessee had incurred expenses in excess to that shown in the books of account. Moreover, on reference, the DVO, Chandigarh has valued the cost of construction of property No. 35 HPSIDC Baddi at ₹ 23,79,000/- on account of building improvement for A.Yrs. 2005-06 to 2007-08, which stands in consonance with the declared expense of ₹ 22,37,694/- shown by assessee in its books of accounts. Moreover, this issue has been decided by ITAT, Delhi Bench in assessee’s own case for A.Y. 2006-07 to 2008-09 in favour of the assessee. Disallowance of 1/8th of the telephone expenses, vehicle depreciation & vehicle maintenance on adhoc basis - Held that:- No expenditure is pointed out of inadmissible nature. The disallowance on mere suspicion and estimate is not sustainable in view of the decisions of Hon’ble Supreme Court in the case of Dhakeshwari Cotton Mills [1954 (10) TMI 12 - SUPREME Court ] and Sayaji Iron & engineering Co. vs. CIT [2001 (7) TMI 70 - GUJARAT High Court ], wherein it has been held that no disallowance is called for on account of personnel use of vehicle/telephone by the directors/officials in the hands of a company. We, therefore, do not find any justification to interfere with the order of the ld. CIT(A) on this count.- Decided in favour of assessee Addition on account of sale of scrap on estimated basis - Held that:- The alleged notings, whatsoever, pertained to the years 2007-08 and 2008-09. Moreover, the Baddi Unit of assessee commenced production from May, 2005 and therefore, there is no reason to generate the scrap and sale thereof during the assessment year under consideration. We are, therefore, not inclined to interfere with the order of ld. CIT(A) deleting the impugned addition. - Decided in favour of assessee Disallowance u/s. 14A read with Rule 8D - Held that:- AO has failed to establish any correlation of expenditure with the exempted income. During the year under consideration, there was exempt income for ₹ 1,45,161/- and on this income no expenses have apparently been incurred as during the year the investment has decreased from ₹ 324.97 lacs to 210.77 lacs. We, therefore, do not find any reason to disturb the finding of CIT(A) that there being no applicability of Rule 8D for A.Y. 2005- 06 and no nexus having been found between the expenses incurred vis-à-vis the exempt income, the disallowance of ₹ 7,35,818/- is liable to be deleted. - Decided in favour of assessee
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