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2012 (12) TMI 194 - AT - Income TaxAdditional depreciation u/s 32(1)(iia) – Whether assessee can claim additional depreciation u/s 32(1)(iia) on assets given on lease - Assessee engaged in providing P&M on lease - Installation of machines was in the factory of customers – AO argued that since assessee is not the actual user of machines therefore not entitled for additional depreciation – Held that:- There is no dispute that the assessee in this case satisfies both the above conditions of Section 32(1)(iia). The section does not stipulate that the assessee should use the P&M in the business of manufacture or production of any article. Following the decision in case of First Leasing Company Of India Ltd. (1998 (7) TMI 19 - MADRAS HIGH COURT) held that the assessee would be entitled to additional depreciation u/s 32(1)(ii a) on the leased assets. In favour of assessee Deduction u/s 80G – Exemption u/s 35(1)(ii) - Assessee has made donation to Auroville Foundation, under the Ministry of HRD - it claimed deduction u/s 35 (1)(ii) - application for renewal of exemption u/s. 35(1)(ii) made by Aravali foundation, was not disposed of by the CBDT - assessee was unable to produce the notification renewing the exemption – Assessee made an alternate claim for deduction u/s 80G - Held that:- Nevertheless there is violation of Rule 46A, as the CIT(A) has admitted a Certificate dt. 26th October,2010 given by the Foundation, without giving the AO an opportunity to examine the same. Issue remand back to AO Addition on account of excess interest paid u/s 40A(2)(b) - Assessee was paying interest @ 10% to two parties - Whereas it was paying interest at 8% to the Directors of the Company - The difference of 2% was disallowed – Held that:- AO has failed to make out a case that funds at a lower rate of interest than 10% were available in the market. assessee company has paid interest to banks @ 13%, which is indicative of the fact that the funds were not available in the market at a rate lower than 10%. Issue decides in favour of assessee
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