2012 (9) TMI 1215 - AT - Income Tax

Summary

Issues Involved:
1. Disallowance of weighted deduction u/s 35(2AB)
2. Disallowance of 50% depreciation on energy-saving plant and machinery
3. Disallowance of depreciation on assets purchased from Pravin Metal Corp.
4. Disallowance of computer software expenditure
5. Overall deduction u/s 80HHC
6. Disallowance of deduction on account of DEPB credit u/s 80HHC
7. Consideration of interest and rental income under different heads

Summary:

1. Disallowance of weighted deduction u/s 35(2AB):
The assessee challenged the disallowance of Rs. 34,14,178 claimed as a weighted deduction u/s 35(2AB). The Assessing Officer (AO) disallowed the deduction due to the absence of an agreement with the prescribed authority (DSIR) and the lack of Form 3CM approval. The Commissioner (Appeals) upheld the AO's decision, emphasizing the necessity of Form 3CM for eligibility. The Tribunal, however, noted that the assessee had obtained the required approval for the Vapi unit in Form 3CM after the Commissioner (Appeals)'s order. The Tribunal directed the AO to verify this approval and allow the deduction for the Vapi unit while disallowing it for the Thane unit due to the absence of Form 3CM.

2. Disallowance of 50% depreciation on energy-saving plant and machinery:
The assessee did not press this ground, and it was dismissed as "not pressed."

3. Disallowance of depreciation on assets purchased from Pravin Metal Corp.:
The Tribunal restored this issue to the AO for re-examination, following its earlier decision in the assessee's case for assessment year 2001-02, where the facts were not explicitly clear.

4. Disallowance of computer software expenditure:
The Tribunal allowed the assessee's claim for computer software expenditure, following its earlier decision for assessment year 2001-02. The expenditure on SAP accounting package, which was scrapped due to commercial expediency, was considered a business expenditure.

5. Overall deduction u/s 80HHC:
The assessee did not press this ground, and it was not adjudicated.

6. Disallowance of deduction on account of DEPB credit u/s 80HHC:
The Tribunal directed the AO to re-compute the deduction u/s 80HHC in accordance with the Supreme Court's decision in Topman Exports v/s CIT, where the sale value less the face value of DEPB represents profit on transfer of DEPB.

7. Consideration of interest and rental income under different heads:
The Tribunal restored this issue to the AO for fresh consideration, following its earlier decision in the assessee's case for assessment year 2001-02. The AO was directed to decide the issue afresh in light of the Tribunal's observations and relevant judicial precedents.

Conclusion:
The appeal was partly allowed, with specific directions for verification and re-examination by the AO on certain issues. The Tribunal's decision emphasized adherence to procedural requirements and judicial precedents in determining the eligibility for deductions and allowances.