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2023 (8) TMI 70 - AT - Income TaxDisallowance of weighted deduction claimed u/s. 35(2AB) - excess expenditure over and above what was certified by the competent authority DSIR has been disallowed and added back to the total income - HELD THAT:- As per prescribed rules, the assessee should submit the details of expenditure to the Competent Authority i.e., DSIR and said authority will certify whether expenditure incurred by the assessee is eligible for weighted deduction u/s. 35(2AB). In this case, the assessee has submitted details of expenditure to DSIR and the DSIR has certified a sum as eligible expenditure for the purpose of section 35(2AB) - AO, after considering Form 3CL issued by the DSIR dated 27.07.2015, has disallowed excess expenditure over and above what was certified by the Competent Authority and added back to the total income. In our considered view, there is no error in the reasons given by the AO to disallow uncertified expenditure u/s. 35(2AB) of the Act, and thus, we are inclined to uphold the findings of the ld. CIT(A) and reject ground taken by the assessee for both assessment years. Disallowance of interest on borrowed capital u/s. 36(1)(iii) - AO has disallowed interest paid on borrowed capital u/s. 36(1)(iii) as the assessee has borrowed capital for the purpose of acquisition of capital asset and thus, interest paid on said borrowed capital should be capitalized to the asset till such asset is put to use - HELD THAT:- As per provisions of section 36(1)(iii) of the Act, proviso provided thereto, any amount of interest paid in respect of capital borrowed for acquisition of asset shall not be allowed as deduction till the date of such asset first put to use. Therefore, we are of the considered view that, there is no error in the reasons given by the AO to disallow interest paid on borrowed capital u/s. 36(1)(iii) of the Act and thus, we are inclined to uphold the findings of the ld. CIT(A) and reject ground taken by the assessee for both assessment years. Alternate plea of the assessee for depreciation - As we find that when interest paid on borrowed capital is added to the cost of the asset, then the assessee is eligible for depreciation on value of asset including interest paid on borrowed capital, if any capitalized to said asset account. Therefore, we direct the AO to verify the claim of the assessee and allow depreciation as per the law. Nature of receipt - treatment of focus marketing subsidy received from Government - revenue or capital receipt - HELD THAT:- We find that an identical issue has been considered by the Tribunal in the case of M/s. Hyundai Motors India Ltd [2021 (9) TMI 1013 - ITAT CHENNAI] where the Tribunal after considering relevant facts held that, focus market scheme subsidy received by the assessee from Government of India is revenue in nature and the same was given to offset higher cost of freight and other disabilities of exporters to be more competitive in exports to certain regions. Therefore, same cannot at any stretch of imagination be considered as capital in nature, as claimed by the assessee. Focus market scheme subsidy received by the assessee from Government of India is revenue in nature, which cannot be considered as capital receipt. Additional depreciation u/s. 32(1)(iia) - claim denied as additional depreciation is allowable u/s. 32(1)(iia) of the Act, in the year in which said asset is purchased, but not in the subsequent assessment year - HELD THAT:- This issue has been considered in the case of Brakes India ltd [2017 (4) TMI 511 - MADRAS HIGH COURT] where as considered the issue in light of provisions of section 32(1)(iia) of the Act and held that balance additional depreciation in the year following the previous year in which the said asset is installed and put to use is allowable. CIT(A), after considering relevant facts and also by following the decision of Brakes India Ltd vs DCIT (supra), and TP Textiles Private Limited [2017 (3) TMI 739 - MADRAS HIGH COURT] deleted additions made by the AO and thus, we are inclined to uphold the findings of the Ld.CIT(A) and reject ground taken by the revenue for both assessment years. Depreciation on UPS - @ 60% OR 15% - Whether UPS is an integral part of computer and computer software? - HELD THAT:- We find that this issue is covered in favour of the assessee by the decision of ITAT, Chennai Benches in the assessee’s own case for assessment year 2013- 14 where the Tribunal held that UPS, Printer and Scanner are integral part of computer and computer software and eligible for higher depreciation of 60% as applicable to computer software. Disallowance u/s. 14A r.w.r. 8D - As per assessee he has not received any dividend income and hence, there can be no disallowance u/s. 14A - HELD THAT:- It is a well settled principle of law by the decisions of various courts including the case of Redington India Ltd [2017 (1) TMI 318 - MADRAS HIGH COURT] where it has been clearly held that in absence of any dividend income, disallowance contemplated u/s. 14A cannot be made. In this case, there is no dispute with regard to the fact that the assessee has not received any dividend income and hence, there can be no disallowance u/s. 14A. Decided in favour of assessee.
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