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2016 (2) TMI 1278 - ITAT CHENNAIDisallowance of additional depreciation claimed u/s.32(1)(iia) - depreciation was claimed during the year at the rate of 7.5% (before 50% depreciation) in respect of second half of the year on the additions to plant and machinery in the assessment year 2005-06 - HELD THAT:- Since the asset was purchased during the second half of financial year 2004-05 and only 50% of depreciation was allowed and pleaded for carry forward of balance 50% to be claimed in the assessment year 2006-07. On perusal of the judicial decisions and objections of Finance Minister speech Additional depreciation has to be allowed only in the case of new plant and machinery and not WDV value on subsequent years. The assessee also relied on the decision Cosmos Films Ltd. [2012 (9) TMI 281 - ITAT DELHI] where the Tribunal has allowed the claim of assessee for 50% of additional depreciation u/s.32(i)(iia) in respect of new Plant & Machinery installed at the new eligible industrial undertaking where Plant & Machinery were put to use for less than 180 days in the year of installation and the assessee had claimed only 50% of the additional depreciation and the balance amount was claimed in the next year. Respectfully following the Tribunal decisions, we direct the Assessing Officer to allow additional depreciation claimed by the assessee. This ground of the assessee is allowed. Disallowance of additional depreciation claimed on assets eligible for 100% deduction - assessee has claimed additional depreciation on the assets entitled for 100% depreciation though used for less than 180 days - HELD THAT:- The legislature is clear where the assets itself is allowed 100% depreciation which have been used for less than for 180 days. The claim for additional depreciation does not satisfy the provisions under Sec. 32(1)(iia). Therefore, we are of the opinion that the Assessing Officer has examined and correctly disallowed and we uphold the findings of the Assessing Officer and dismiss the assessee ground. Disallowance of additional depreciation on the leased assets (windmill) - assessee during the year has acquired windmills and leased out and claimed additional depreciation - HELD THAT:- Prima facie the assessee is in the business of manufacture of commercial vehicles and engines and additional depreciation is claimed on leased asset of windmills. During the previous year the assessee has purchased windmills leased out to others and claimed additional depreciation on such leased assets. On perusal of provisions u/s.32(1)(iia) and the decisions relied by the assessee which are in leasing business and cannot be brought into category of manufacture of commercial vehicles. The provisions are very clear on this issue. The claim of additional depreciation is in violation of provisions u/s.32 of the Act were depreciation is allowed - allow the ground in favour of the Revenue. Disallowance of depreciation on residential building - HELD THAT:- As per the Income Tax Rules the depreciation on building shall be allowed at 5% instead of 10% claimed by the assessee. The contention of the assessee that CIT (Appeals) in earlier assessment year has allowed higher depreciation cannot be accepted and on reference to the provisions of the Acts buildings used for residential purpose depreciation allowed @ 5% as per Income Tax Rules. Hence, we uphold the order of the Assessing Officer and dismiss the ground of the assessee. Disallowance u/s.14A r.w.r. 8D - HELD THAT:- The action of the AO applying Rule 8D is not correct as the provisions of Rule 8D are introduced effective from 24.03.2008 and applicable from the assessment year 2008-09 and direct the Assessing Officer to disallow 2% of exempt income as disallowance u/s.14A of the Act. This ground of the assessee is partly allowed. Disallowance of Wealth Tax paid on business assets - HELD THAT:- The arguments of the ld. Authorised Representative are not convincing and the provisions are very clear u/s.40(iia) as any sum paid on account of Wealth Tax is not deductable. Considering the apparent facts, we confirm the disallowance of the Assessing Officer and dismiss the assessee ground. Disallowance u/s.92C - international transactions and specific domestic transactions based on the documents prescribed and maintained by the assessee in respect of international transactions - HELD THAT:- Chartered Accountant report is based on the Audited books of account maintained by the assessee were the international transaction have been incorporated and are authenticated. The report of the Chartered Accountant cannot be ruled out and also factual position has to be considered to correct any mistake in calculating of Arms Length Price(ALP) for valuation, and it is evident that the revised form 3CEB includes the proper comparables in respect of vehicles, parts which are integral product of commercial vehicles. DR vehemently argued against filing of revised form 3CEB and limitation period, we consider the apparent facts, provisions of law, evidence and the action of TPO in rejecting the revised form 3CEB is not proper as factual comparables certified by the Chartered Accountant in Revised form 3CEB cannot be ignored and we in the interest of justice, remit the disputed issue to the file of the Assessing Officer and to consider Revised form 3CEB filed by the assessee for assessment and calculation of Arms Length Price. Assessing Officer should provide adequate opportunity of hearing to the assessee and pass the order. We set aside the order of the Assessing Officer and partly allow the grounds of assessee for statistical purpose. Disallowance u/s. 43B relating to units sold as slump sale of the Act - Contention of AR that since there is netting of liability and such discharge of liability is treated as deemed payment u/s 43B - HELD THAT:-Before us the assessee has not produced any evidence to show that such payments are made to the concerned Government Departments and also there is no liability in the books of account of the assessee. Considering the circumstances, we are of the opinion if assessee company makes the payment of statutory dues and produced challans, proof of payments, deduction shall be allowed. Therefore, we remit the issue to the file of the Assessing Officer for verification of claim u/sec 43B of the Act. The Assessing Officer is directed to verify and examine the discharge of statutory payments and allow the deduction. Accordingly, the ground of the assessee is partly allowed for statistical purpose. Disallowance of depreciation on UPS - Assessee claimed depreciation @ 80% treating UPS as energy saving device - HELD THAT:- The claim of the assessee UPS is a energy saving device and alternative claim that it is a integral part of computer cannot fit into the block. The UPS system is only supporting the system and is like other plant and machinery and has separate identity on its own. Therefore, we follow the co-ordinate bench decision of the Tribunal and allow depreciation 25% only and accordingly the appeal is partly allowed. Disallowance of Securities Transaction Tax - AR submitted that sale of securities are covered under transaction tax and contract notes are inclusive of securities transaction tax on sale or purchase of securities - HELD THAT:- The fact that the securities transaction tax is automatic in stock exchange transactions. The assessee has considered profit after deducting securities transaction tax (STT) and reflected in the Books of Account. The assessee has not claimed deduction as a business expenditure as the income on sale of securities offered under capital gains in computation of income. Considering the circumstances, we direct the Assessing Officer to verify the computation of income and delete the addition of Securities Transaction Tax after verification. Disallowance of weighed deduction on a expenditure incurred on Department of Scientific and Industrial Research u/s. 35(2AB) - Rectification u/s 154 - HELD THAT:- Assessing Officer has granted relief under Rectification order dated 10.03.2011 on submission of Form 3CL and weighted deduction was allowed. Since the Assessing Officer has rectified the order and allowed the deduction, the assessee has not pressed the ground and treated as dismissed. Denying of TDS credit - HELD THAT:- We direct the Assessing Officer to allow TDS credit as per form 16A after verification of TDS deducted by the deductor in accordance with law and this ground of the assessee is allowed.
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