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2013 (9) TMI 192 - AT - Income TaxAllowance of additional depreciation - Plant and machinery on which such depreciation is being claimed was used in office and not in the manufacturing activity of the assessee - It is an admitted position that assessee was already engaged in manufacturing activity – Reliance has been placed upon the judgment in the case of VTM Ltd [2010 (10) TMI 925 - MADRAS HIGH COURT], wherein it has been held that it was not necessary for a new plant and machinery to have operational connectivity to products already being manufactured – In the present case, computer software was SAP R/3 generally used in managing inventory as well – Additional depreciation allowable – Decided in favor of Assessee. Apportionment of expenditure on Research & Development to the units on which assessee had claimed deduction under Section 10B of the Act - Assessee mentioned that the products manufactured in the units for which 10B was available, were time tested products so the new product developed from the R&D could not be used – Held that:- Nothing is available on record to show what tangible benefit, if any, assessee had derived on account of the research work. Whether any such earlier research had helped the assessee with regard to its activities in the units on which it had claimed deduction under Section 10B of the Act, is also not on record - Matter requires a fresh look by the Assessing Officer. Assessing Officer has to verify whether the research done by the assessee had any tangible benefit vis-à-vis the activities carried on by it from the units on which deduction under Section 10B was claimed – Remitted this issue back to Assessing Officer for consideration afresh – Decided in favor of Assessee for statistical purpose. Set off of loss in 10B units against profits of non-10B units – Held that:- Reliance has been placed upon the Hon'ble Bombay High Court decision in the case of Hindustan Unilever Ltd [2010 (4) TMI 206 - BOMBAY HIGH COURT] – It is allowed to set off of loss in the 10B units with profits in other non-10B units by putting reliance upon the above named case – Decided in favor of Assessee. Disallowances made under Section 40(a)(i) of the Income Tax Act - Held that:- Recipients of the payment made by the assessee had not made available to the assessee any new technique or skill which assessee could use in its business. The services rendered by the said parties related to clearing, warehousing and freight charges, outside India. The logistics service rendered was essentially warehousing facility. This cannot be equated with managerial, technical or consultancy services. Even if it is considered as technical service, the fee was payable only for services utilized by the assessee in the business or profession carried on by the said non-residents outside India. Such business or profession of the non-residents, earned them income outside India. Thus, it would fall within the exception given under sub-clause (b) of Section 9(1) of the Act - Assessee was justified in having a bona fide belief that the payments did not warrant application of Section 195 of the Act – Assessee could not have been saddled with the consequences mentioned under Section 40(a)(i) of the Act – Decided in favor of Assessee. Disallowance of additional depreciation u/s 32(1)(iia) – Held that:- A perusal of the provisions of section 32 as applicable for the relevant assessment year clearly shows that additional depreciation is allowable on the plant and machinery only for the year in which the capacity expansion has taken place which has resulted in the substantial increase in the installed capacity. In the assessee's case this took place in the assessment year 2005-06 and the assessee has also claimed the additional depreciation during that year and the same has also been allowed. Each assessment year is separate and independent assessment year. The provisions of section 32 of the Act do not provide for carry forward of the residual additional depreciation, if any. Disallowance of expenses incurred for purchase of software license - The nature of software, which was acquired by the assessee, is not at all clear from the orders of authorities below. Except for mentioning that it was for purchasing "Virtual Lab Durable Software for Fatigue Rig", no other information is forthcoming – Held that:- . The question whether the payment was made for acquiring right for using a software or for a copyrighted software cannot be answered without such data - The facts are not sufficient to come to a rational conclusion – Matter remitted to the file of A.O. for consideration afresh.
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