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2015 (5) TMI 650 - AT - Income TaxAllowance of balance 50% additional depreciation u/s 32(1)(ii) - new plant and machinery, purchased and put to use for less than 180 days in the immediately preceding year - Held that:- This issue was considered by the Delhi Bench of this Tribunal in the case of Cosmo Films Ltd. (2012 (9) TMI 281 - ITAT DELHI), wherein considering the provisions of section 32(1)(iia) and second proviso to section 32(1)(ii) of the Act found that 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. Since the issue is squarely covered by the decision of coordinate Bench, cited supra, we are of the considered view that the assessee is entitled for additional depreciation u/s. 32(1)(iia) of the Act in these assessment years also. We direct the AO accordingly. - Decided in favour of assessee. Disallowance u/s.14A - whether CIT(A) erred in not deleting the disallowance treated by ld. Addl. CIT as expenses attributable to earning Dividend income and did not hold that no expenses have been incurred to earn the said income - Held that:- The assessee company is engaged in the business of manufacturing and sale of cables and cable wires. The assessee company has held shares purchased in earlier periods as investment and now the AO has to find out that the shares held by the company has been purchased out of its own fund or out of loans taken by the assessee. In case, the AO wants to disallow the interest he has to establish the nexus that the loan taken on which interest payment is made is invested in purchase of shares, by virtue of which it has earned dividend. In term of the above, this issue in both the years is set aside to the file of AO. - Decided in favour of assessee for statistical purposes. Industrial Investment Promotion Assistance - CIT(Appeals) though holding that Industrial Investment Promotion Assistance allowed by the State Govt. is the nature of capital receipt but directing AO for reduce the same from the cost of Fixed Assets for the purpose of computing depreciation by applying the Explanation 10 of Sec. 43(1) - Held that:- The subsidy was received in terms of Madhya Pradesh Industrial Investment Promotion Assistance Scheme, 2004 in respect of Technological up-gradation - cum - Expansion project for manufacture of XLPE underground power cables using Vertical Continuous Vulcanization Technology in India. The scheme has been framed with an objective to increase employment and establishing new industrial unit by enhancing new capital investment in the state of Madhya Pradesh.As per the Scheme, the amount of assistance which is to be claimed on yearly basis is determined @ 75% of total Commercial tax (MP VAT + CST) deposited (net of Input Tax rebate) in respect of sale of products produced using VCV technology on an yearly basis during the eligibility period. In view of these facts assessee claimed a sum of ₹ 2,61,93,863/- being 75% of the tax deposited (Net of Input tax Rebate) for the year under consideration in respect of sale of XLPE Underground Power Cables using VCV technology as capital receipt for the reason that the overall limit of exemption is linked to the fixed capital investment and is in the nature of subsidy for setting up a new unit / expansion of existing unit. The subsidy received as above, is in the nature of capital receipt and CIT(A) has rightly held so. On this issue we confirm the order of CIT(A). In view of the above facts and circumstances of the case and legal position explained by Hon'ble Supreme Court in the case of P. J. Chemicals Ltd. (1994 (9) TMI 1 - SUPREME Court), we are of the view that subsidy receipt should not be reduced from the actual cost of fixed assets for computing depreciation under the provisions of the Act. - Decided in favour of assessee. Exemption of claim for Entry Tax - CIT(A)not directing the AO to treat it as capital receipt - Held that:- Ld. counsel for the assessee could not establish that how this is equivalent to the Industrial Investment Promotion Assistance, the scheme of Govt. of Madhya Pradesh. We find no infirmity in the order of CIT(A) and the same is confirmed. - Decided against assessee. Disallowance of provision for leave liability in terms of clause (f) of section 43B - Held that:- Remit this issue back to the file of AO to decide afresh in term of the decision of Hon'ble Supreme Court in the case of Exide Industries Ltd. [2008 (9) TMI 921 - SUPREME COURT] - Decided in favour of assessee for statistical purposes.
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