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2010 (12) TMI 952 - HC - Income TaxEducation fund and subscription paid to Haryana State Cooperative Development Federation disallowed - Held that:- Details furnished by the assessee before AO clearly are to the effect that the education fund related to assessment year 1992-93 and the subscription related to financial year 1992-93, assessee has claimed expenditure on account of subscription to the extent of 14,12,689. From the details it is noticed that a sum of 25,000 paid to Haryana State Coop. Development Federation for education fund relates to assessment year 1992-93 and an other some of 6,19,671 paid to Haryana State Coop. Development Federation as subscription also relates to financial year 1992-93. Both these amounts are disallowed being not the financial year 1993-94, however, is allowed as deduction. Total disallowance under this head works out to 6,44,672, the assessee followed mercantile system of accounting. In such situation, the deduction claimed could not be allowed in the year of payment but in the year when the amount were due Disallowance of depreciation - auditors of the assessee objected to machinery being kept idle, resulting in loss of interest on investment, the stand of the assessee that the said machinery was installed to increase capacity of the plant, was not taken into account by the Assessing Officer and the CIT(A) – Stand of the assessee is that it resulted in increase of capacity of the plant and that on account of technical justification for the said machinery, items of the machines were installed. - Held that:- Even though the auditors may not have accepted the said stand, the assessee was entitled to free play in joints in taking a decision to install the machinery if in its view the same was necessary for its business. If the assessee was to install such a machinery on its bona fide business consideration, mere absence of proof of actual use thereof was not enough to deny the claim for depreciation -no ground to interfere with the finding of the Tribunal, holding that the assessee was entitled to depreciation on the machinery, as claimed, the appeal is partly allowed.
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