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2015 (11) TMI 1298 - AT - Income TaxReopening of assessment - excess deduction allowed u/s 36(1)(viii) and excess depreciation claimed - Held that:- As per the provisions of section of 36(1)(viii) of Income Tax Act, 1961, the assessee can claim deduction up to 40% of its income by way of creation of reserve. Therefore, a limit was placed by the second proviso on the amount which can be transferred to the reserve. This limit is there in the section since the beginning. Otherwise the assessee will keep on depositing the amount in the reserve and withdrawing it simultaneously and can claim deduction up to 40 % of total income as envisage in the section 36( 1) (viii) of Income Tax Act,1961. In the instant case, it is not clear as to whether the assessee has excluded the amount withdrawn from the reserve as mentioned above in the aggregate of amounts carried to the reserve, there was excess deduction claimed by the assessee in AY 2004-05 and AY 2005-06 to the tune of ₹ 20.47 cr in AY 2004-05 and ₹ 71.65 er in AY 2005-06.However, as per the amended provision, assessee’s eligibility for enhanced deduction is available only, if it is found that amount withdrawn out of the reserve had been offered for taxation u/s.41(4A). However, it is not clear from the record as to whether the amount so withdrawn by the assessee has been offered for tax. Therefore, we restore the matter back to the file of the AO for finding out the factual position and for deciding afresh. - Decided in favour of assessee for statistical purposes. Disallowance of depreciation on the plea assessee had wrongly classified these assets are falling under the head furniture and fixtures, in the plant and machinery - assessee had classified Air conditioners, ECR, Printers, Typewriters, Mobile Phones, Refrigerators, Water Coolers, Photocopiers, EPBX, Fax as machinery and plant and claimed depreciation @ 15% as against @ 10% made by AO - Held that:- Assessee’s claim of depreciation in respect of these items is in accordance with the New Appendix to the I.T. Rules. These are not furniture and fixtures. Accordingly, there is no merit in AO’s action for treating same as furniture and fixture so as to reduce to rate of depreciation from 15% to 10%. The AO is directed to allow depreciation @15% on these items. - Decided in favour of assessee
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