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2010 (7) TMI 953 - AT - Income TaxClaim of depreciation - block of plant & machinery @ 25% - HELD THAT:- the nature of assets i.e. electrical installation that consists of electrical wires, switches, plugs, cables, MCB box and electrical items, which cannot function independently, rather, this is a part of plant & machinery and it cannot be classified under furniture and fittings. Accordingly, we are of the view that assessee is eligible for depreciation under the block of plant & machinery @ 25%. We allow the claim of the assessee and this issue of the assessee’s appeal is allowed. confirming the disallowance of interest - HELD THAT:- We find that AO has disallowed interest expenses of ₹ 1,97,226/- on the interest free loan given to others aggregating to ₹ 16,43,558/-. The CIT(A) also confirmed the action of the AO. In view of the facts, once there is surplus share capital and reserve & surplus available with the assessee, the interest on advances cannot be disallowed. Accordingly, we reverse the order of lower authorities on this issue. This issue of the assessee’s appeal is allowed. CIT(A) in confirming the disallowance of additional depreciation on plant and machinery - The facts in the present case before us are on better footing that the assessee-company’s installed capacity in “made-ups” has increased substantially i.e. more than 25%. From the facts, We also find that the assessee has filed audit report in Form No.3AA under rule 5A as prescribed in respect of “made-ups” division of the assessee-company, whereby the assessee has increased the capacity of bed sheets from 15.60 lakh to 20 lakh in the present year. The capacity is based on number of sewing machines installed in the year under consideration and according to the auditor there has been substantial addition in the number of sewing machines that resulted into increase in the installed capacity substantially. Respectfully following the decision in the case of Hindustan Newsprint Ltd. [2009 (3) TMI 1006 - KERALA HIGH COURT], we allow the claim of the assessee.
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