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2016 (10) TMI 841 - AT - Income TaxDepreciation allowability - operational connectivity to the article or thing - AO disallowed the depreciation holding that clause (iia) of section 32(1) is applicable only on the new plant and machinery acquired by the assessee and engaged in the business of manufacture or production - Held that:- The Hon’ble Madras High Court in VTM Ltd (2009 (9) TMI 35 - MADRAS HIGH COURT ) in almost of identical facts held that the provision does not restrict that the new plant and machinery should have any operational connectivity to the article or thing that was already manufactured by the assessee. Also in Hi Tech Arai ltd (2009 (9) TMI 60 - MADRAS HIGH COURT ) held that sec 32(1) (iia) does not state that the setting up of a new machinery or plant, which was acquired and installed, should have any operational connectivity to the article or thing that was already being manufactured by the assessee. It could be said that setting up of a windmill will not for within the expression setting up of a new machinery or plant. Thus, we respectfully following the decisions of Madras High Court allowed the depreciation claimed by the assessee. In the result this ground of appeal raised by the assessee in the present appeal is allowed. Disallowance under section 14 A - Held that:- During the course of assessment proceeding the assessee submitted that amount of ₹ 4,21,908/-can be taken for disallowance under section 14 A. The voluntary disallowance was not accepted by AO, and AO worked out the disallowance as per the procedure prescribed in Rule 8D (2)(iii) of ₹ 35,32,795/-and added to the total income of assessee. The coordinate bench of this tribunal in assessee’s own case, restricted the disallowance under section 14A at ₹ 10,000/- only as referred above. Thus, keeping in view the order of the Tribunal for AY 2009-10 the disallowance made by AO for ₹ 35,32,795/- under section 14A is deleted. In the year under consideration the exempt income of assessee consist of income from the tax free bonds of ₹ 2,24,91,102/-, dividend income of ₹ 1,47,24,682/-, interest on PPF ₹ 2,28,190/- and LTCG of ₹ 2,93,35,787/-. Major investments were made in earlier years and exempt income is from Government securities. The payments of interest of tax free bonds were credited by way of ECS. Before the lower authority the assessee offered disallowance under section 14A of ₹ 4,21,908/- which was not accepted. This fact is an additional fact in the year under consideration. No such fact is discernable from the order of Tribunal for AY 2009-10. Thus we accept the voluntarily disallowance of ₹ 421,908/- offered by assessee u/s 14A of the Act, before the authorities below. We order accordingly.- Decided in favour of assessee
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