2017 (3) TMI 1807 - ITAT KOLKATA

Interest subsidy received by the assessee under TUFS - Revenue or capital receipt - HELD THAT:- Identical subsidy under the West Bengal Incentive Scheme 2000 was held to be capital receipt not chargeable to tax by this tribunal in the case of DCIT vs PWC Pvt. Ltd. [2016 (7) TMI 1052 - ITAT KOLKATA] . Following the aforesaid decisions we hold that the receipt of subsidy under the West Bengal Incentive Scheme 2000 is a capital receipt not chargeable to tax. Accordingly ground no.1 raised by the revenue is dismissed.

Set off of loss being unabsorbed depreciation of 100% EOU eligible for deduction u/s. 10B against profit on non-eligible unit - HELD THAT:- Admittedly under the provision of section 10B(8) of the Act the assessee had not claimed the benefit of deduction u/s 10B of the Act and the letter of the Assessee in this regard filed in the course of Assessment proceedings for AY 2005-06. For an assessee who was opted out of the provision of section 10B of the Act, the profits of EOU unit have to be regarded as any other business profits and the computation provision of section 70 to 72 of the Act would be applicable. In such an event the claim of set off as claimed by the assessee deserves to be allowed. Apart from the above in the light of the decision of the Hon’ble Supreme Court in the case of Yokogawa India Ltd. [2016 (12) TMI 881 - SUPREME COURT] provision of section 10B have to be regarded as deduction provision, the provisions of section 70 to 72 of the Act will be applicable. In view of the above we uphold the order of CIT(A) on this issue and dismiss ground no.2 raised by the revenue.

Additional depreciation on plant and machinery only in the year of acquisition and installation u/s 32 - CIT(A) allowing assessee's claim of additional depreciation of plant and machinery on original cost in the year subsequent to the year of acquisition and installation - Additional depreciation was rejected by CIT(A) for the reason that additional depreciation is available only in respect of new plant and machinery acquired and installed after 31.03.2005 - only objection of the AO is that the provisions refer to “new machinery or plant” and therefore the machinery will cease to be a new machinery after the end of the first year in which it is installed or put to us - HELD THAT:- In our view this stand taken by the revenue is not supported by the language of statutory provision. The condition imposed by the relevant provisions is that Plant and Machinery must be new at the time of installation to be eligible for additional depreciation u/ s 32(1)(iia) and not new in subsequent years. The expression “new machinery” is therefore to be construed as referring to the condition that at the time of acquisition or installation the machinery or plant should be new. Going by the legislative history of the relevant provision, we are of the view that the condition for allowing additional depreciation only in the initial assessment year ceased to exist as and from 01.04.2006. The plain language of the section warrants such an interpretation. We therefore uphold the order of CIT(A) and dismiss ground no.3 raised by the revenue.

MAT - Deduction on account of profit from sale of fixed asset while computing book profit u/s. 115JB - whether CIT(A) has erred in allowing assessee's claim of deduction ignoring the provision introduced by the Finance Act, 2008 with retrospective effect from 01.04.2001 and thereby has erred in deleting the addition? - HELD THAT:- Decision of the Mumbai Bench of the ITAT in the case of Frigsales [2005 (6) TMI 478 - ITAT MUMBAI] based on which the CIT(A) held that profit on sale of fixed assets cannot be included as part of book profits for the purpose of Sec.115JB of the Act is applicable to the facts of the present case.