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2016 (5) TMI 1170 - AT - Income TaxDisallowance u/s 14A - Held that:- Even if the investment did not yield any dividend in the year under consideration, the disallowance under section 14A of the Act on the expenditure incurred for earning income is warranted, notwithstanding the fact that no such income was earned. Further, we find that while making investment, the element of expenditure involved in the process cannot be ruled out. However, this expenditure may not be direct. Thus, there is an expenditure involved in making these investments. Therefore, there is a need to identify and apportion a reasonable amount of expenses as attributable for earning the exempted income. After taking various factors into consideration, came to a conclusion that such expenses can be reasonably calculated @ 0.5% of the average investments made by the assessee. For this purpose, the legislature has arrived at a common formula to calculate the expenses @ 0.5% of the average investments made as per step-3 of the formula given in Rule-8D. Accordingly the legislature incorporated and introduced the Rule-8D. Further, as could be seen from the assessment order, the Assessing Officer has rightly quantified the expenditure under Rule 8D(2)(iii) and disallowed under section 14A of the Act. - Decided against assessee Disallowance of additional depreciation under section 32(1)(iia) - whether the assessee is entitled to carry forward 50% of additional depreciation in the succeeding year when the plant and machinery was put in use less than 180 days in the preceding previous year? - Held that:- Assessee is entitled to claim 50% of additional depreciation in the succeeding year when the plant and machinery was put in use for less than 180 days in the preceding previous year. Thus, respectfully following the decision in the case of Automotive Coaches & Components Ltd. v. DCIT (2016 (4) TMI 34 - ITAT CHENNAI ), we direct the Assessing Officer to allow 50% of additional depreciation in the succeeding year as claimed by the assessee. - Decided against revenue
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