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2012 (12) TMI 865 - AT - Income TaxDepreciation on the Uninterrupted Power Supply (“UPS”) - disallowing 80% as UPS is not an energy saving device but instead an energy supply device - Held that:- Legislature in its wisdom has chosen to show an Automatic Voltage Controller’ as an electrical equipment eligible for 100% depreciation, falling under the broader head of energy saving devices. Thus once Legislature deemed that an ‘Automatic Voltage Controller’ is a specie falling within energy saving device, it is not for the AO or CIT(A) to further analyse whether such an Item would indeed an energy saving device. In fact it is beyond their powers. Whether an UPS is an Automatic Voltage Controller’? - As it is mentioned in the product brochure that the UPS automatically corrected low and high voltage conditions and stepped up low voltage to safe output levels. Thus there cannot be a quarrel that UPS was not doing the job of voltage controlling automatically. Even when it was supplying electricity at the time of power voltage, the outages remained controlled. Therefore a UPS would definitely fall under the head of’ Automatic Voltage Controller’ eligible for claiming 100% depredation on UPS - in favour of assessee. Disallowance of interest on loan given to subsidiaries - Held that:- Finding substance in the submission of the assessee that no disallowance could be made in respect of the opening balances of loans and advances which were coming from earlier years and in which there were no disallowance as supported by the judgment in case of Sridev Enterprises (1991 (1) TMI 52 - KARNATAKA HIGH COURT) in which it was held that in case loans and advances were being carried forward from earlier years in which there was no disallowance, no disallowance could be made in respect of the opening balance in the current year as the nature and status of the advances on the first day of the current year remained the same as the nature and status of the advances on the last day of preceding year - A categorical finding has been given by the AO that the average interest cost for the AY 2006-07 and 2007-08 are 4.86% and 4.72 % respectively. The assessee had charged @ 6% interest from its subsidiary, therefore, the assessee has charged more interest rate than the average interest rate borne by it on interest bearing funds. Therefore, there is no justification for making any addition - in favour of assessee. Leave encashment expenses - disallowance on ground of double deduction - Held that:- The assessee had been making the claim earlier on the basis of actuarial valuation but consequent to the amendment of section 438 the claim was being made on payment basis from A.Y.2003-04. AO has made estimated disallowance out of the claim made on payment basis on the ground that part of the payments made may relate to earlier year when these were allowed on actuarial basis. AO has made disallowance on estimate which cannot be sustained. Only the payment which had actually been allowed earlier can be disallowed - as matters require fresh examination and disallowance has to be restricted to the amounts allowed in the earlier year restore the issue to the file of AO for passing a fresh order - in favour of assessee for statistical purposes.
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