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2016 (5) TMI 61 - ITAT CHENNAIAddition u/s 40A(2)(a) - disallowance of trade discount allowed by the assessee to its sister concerns - whether trade discount is not an expenditure as discount was not made in sale bill but only in the way of book adjustment - Held that:- The issue has been elaborately considered by the Commissioner of Income-tax (Appeals) with reference to the findings of the Assessing Officer and the submissions of the assessee and following the various High Court decisions including the decision of the jurisdictional High Court in the case of CIT v. A. K. Subbaraya Chetty and Sons [1979 (10) TMI 60 - MADRAS High Court ] held that discount allowed to sister concerns were not unreasonable and cannot be excessive having regard to the market rate. The Commissioner of Income-tax (Appeals) also held that the Assessing Officer was in error in disallowing the trade discount under section40A(2)(a) since trade discount allowed to sister concerns cannot be considered as an item of expenditure incurred by the assessee - Decided in favour of assessee Depreciation on windmills - AO while completing the assessment restricted the depreciation on windmill to 7.69 per cent. as against the claim of the assessee at 80 per cent. holding that the assessee has not exercised option for claiming higher depreciation - Held that:- Going through the decision of jurisdictional High Court in the case of CIT v. ABT Ltd. [2014 (10) TMI 788 - MADRAS HIGH COURT ] we find that the issue is squarely covered in favour of the assessee as the hon'ble High Court held that if the assessee exercised option in terms of second proviso to rule 5(1A) of the Income-tax Rules at the time of furnishing of return of income, it will suffice no further letter of request or intimation with regard to exercise of option is required. Since the returns were filed in accordance with section 139(1) of the Act and the form prescribed therein make a provision for exercising option in respect of the claim of depreciation, no separate procedure is required. In the case on hand before us, the assessee has claimed higher depreciation in the return filed under section 139(1) of the Act claiming higher depreciation at 80 per cent. on windmill which amounts to exercise of option for higher claim. Thus, respectfully following the said decision of the jurisdictional High Court, we uphold the order of the Commissioner of Income-tax (Appeals) on this issue and reject the grounds raised by the Revenue. - Decided in favour of assessee
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