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2014 (1) TMI 33 - AT - Income TaxAdditional depreciation u/s 32(1)(iia) – Held that:- Following DCIT vs Cosmo Films Ltd [2012 (9) TMI 281 - ITAT DELHI] – As per provisions of section 32(1)(iia) and proviso to section 321)(ii) of the Act - The extra depreciation allowable u/s 32(1)(iia) in an extra incentive which has been earned and calculated in the year of acquisition but restricted for that year to 50% on account of usage - The so earned incentive must be made available in the subsequent year - The overall deduction of depreciation u/s 32 shall definitely not exceed the total cost of machinery and plant - When there is no restriction in the Act to deny the benefit of balance 50%, the assessee is entitled for the balance additional depreciation in the subsequent assessment year – Decided in favour of assessee. Share issue expenditure – Held that:- It was not claimed before the lower authority that the expenditure was incurred in respect of issue of shares and fees paid to Registrar of Companies – It was not clear to the lower authorities that the capital was raised for augumentation of the working capital or increase in share capital - The Tribunal is of the opinion that the matter needs to be reconsidered by the assessing officer – The matter was restored for fresh adjudication to find out whether, funds raised by the assessee and utilization thereof was for the purpose of acquiring a capital asset by way of its expansion or it is for the working capital of the existing business. Disallowance of investment written off – Held that:- Since the departmental appeal is already pending before the High Court against the order of this Tribunal for assessment year 2002- 03, reference to larger bench will not serve any purpose - Following the order of this Tribunal for the assessment year 2002-03, the order of assessing officer is set aside and the assessing officer is directed to allow 10% of the remaining investment written off as business loss as held by the earlier bench. Disallowance of loss on the loan to subsidiary company – Held that:- If the money was advanced for the purpose of acquiring a capital interest which is enduring in nature, then the loss or profit suffered in that process has to be treated in the capital field. The loss / profit was not earned / received in the process of earning profit. The loss is suffered in the course of acquiring a capital asset for expansion of the profit earning apparatus - The assessing officer had rightly found that there is no loss suffered by the assessee in conversion of loan into preferential shares of the Mauritius subsidiary company and the loss shown is only a book loss – Even if it is assumed that it is a loss acquiring capital asset, such capital loss cannot be considered for computing total income - Decided against assessee. Disallowance of depreciation u/s 38(2) - Let out portion of the corporate office building – Held that:- Following assessee’s own case for the A.Y. 2006-07 - The assessee is not entitled for depreciation on the Gurgaon office premises - Decided against assessee. Interest on advance to associated enterprise – Held that:- Following Siva Industries & Holdings Ltd vs ACIT ITA No.2148/Mds/2148 [2011 (5) TMI 451 - ITAT, CHENNAI] - The loan was given in foreign currency - The transaction was an international transaction, commercial principle with regard to international transaction has to be applied - The Tribunal found that the prime lending rate in domestic market has no application and international market rate fixed by LIBOR would come into play - LIBOR should be applied - The assessee charged interest at 7.5% which is higher than the LIBOR rate of interest during that period 5.39% per annum - The assessing officer is not justified in rejecting the LIBOR rate of interest by determining the arm's length price in respect of loan advanced to associate enterprise – Decided in favour of assessee. Deduction u/s 80IA – Held that:- Following assessee’s own case for the A.Y. 2055-06 - Diesel power generation unit for captive consumption is also eligible for deduction u/s 80IA of the Act - In respect of gas turbine power generation unit, the issue was remanded back to the file of the assessing officer since the same was raised before this Tribunal as an additional ground – Partly decided in favour of assessee. Additional deduction of 50% expenditure on in-house research and development u/s 35(2AB) – Held that:- The issue was remanded back to the file of the assessing officer as the assessee failed to claim the same before the assessing officer – The issue was restored for fresh adjudication.
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