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TMI Blog2015 (9) TMI 906X X X X Extracts X X X X X X X X Extracts X X X X ..... mining total income of the assessee at Rs. .201,90,40,968/-. Thereafter, the ld. CIT, while exercising power under section 263 of the Act issued notice for the following reasons: a) The assessee has claimed arrears of additional depreciation of Rs. .5,82,81,045 relating to assets installed in the previous year relevant to A.Y. 2003-04 at its Mysore plant and the same was allowed by the A.O. The A.O. has not examined whether the same is admissible under section 32(iia) as additional depreciation can be claimed only on assets installed during the relevant previous year. b) The assessee has returned long term capital gain on sale of Sundaram Bond Saver (bonus units) of Rs. . 8,31,02,733 and after setting off the brought forward losses the capital gains computed was Rs. . 8,05,38,781. This has been taxed at 10% instead of 20% as applicable. The A.O. has not examined whether the units sold by the assessee would fall within the definition given in Explanation to section 115AB. The A.O. has also not examined whether the proviso to section 112 would apply to the assessee as the said proviso would appear to apply only to those shares, bonds or units which are eligible for indexation benef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al Fund is a long term capital asset and a unit u/s.10(23D) of the Income-tax Act, whether it is eligible for the benefit of 10% under proviso to Sec.112 has not been explained. The mutual fund referred by the assessee is not eligible for indexation with third proviso thereof. Only the capital indexed bonds issued by the Government are eligible for indexation benefit under second proviso to Sec. 48. That being the case, the question is whether the assessee will be eligible for the benefit of proviso to Sec.112, which states that 10% tax is to be computed before indexation. Proviso to Sec.112 states that 10% tax is to be computed before indexation. Proviso to Sec.112 initially applied only to the shares which are eligible for indexation benefit. When the units were included, these were restricted to the units as defined in clause (b) of Explanation 1 to Sec.115AB - though these were not eligible for indexation benefit, one could contend that the, assessee would be eligible for the benefit of proviso to Sec.112 notwithstanding that it is not eligible for indexation benefit according to the second proviso to Sec.48. However, as the issue of application of proviso to Sec.112 was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sidering the detailed submissions made by the assessee and application of his mind, allowed the claim of the assessee. Therefore, it cannot be subject matter under section 263 of the Act. Alternatively, he has submitted that the issue involved is in respect of additional depreciation and two views are possible and the view which was taken in favour of the assessee has to be upheld, but it cannot be taken under section 263 for that he has relied on the decision of the Tribunal in the case of Devi Polymers Pvt. Ltd. v. ACIT in I.T.A. No. 165/mds/2014 dated 09.04.2014. 8. On the other hand, the ld. DR has submitted that as per clause (iia) of section 32(1), in case of new machinery or plant which has been acquired and installed, the assessee is eligible to claim additional depreciation of 15% provided the conditions as stated under the said section is fulfilled. The ld. DR has submitted that the assessee has not put to use the new machinery for more than 180 days for the assessment year under consideration. Therefore, the assessee is only eligible for 50% for the year in which new machinery has been used by the assessee and the proviso has not provided carry forward of re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imed more than 20% as additional depreciation considering both the years together". The Assessing Officer, by following the above computation given by the assessee, allowed the claim of the assessee. For the sake of convenience, the relevant provision of section is reproduced as under: "Provided: (iia) in the case of any new machinery or plant (other than ships and aircraft), which has been acquired and installed after the 31st day of March, 2002, by an assessee engaged in the business of manufacture or production of any article or thing, a further sum equal to fifteen per cent of the actual cost of such machinery or plant shall be allowed as deduction under clause (ii) :" 10. As per the above provisions of law, if the assessee has not used the new assets for more than 180 days, the assessee is only eligible to claim additional depreciation at 50%. The statute provides 50% for the year under consideration in which it is put to use. The statute does not provide anything to claim additional depreciation in the subsequent year. Therefore, the Assessing Officer, without applying his mind, simply accepted the explanation given in the Note by the assessee and allowed the claim of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rned, the ld. Counsel for the assessee has submitted that all the details in respect of the above are filed before the Assessing Officer as pointed out from paper book page No. 43, 46, 47 & 48. He further submitted that the issue involved in this appeal is covered by the judgement of the Hon'ble Bombay High Court in the case of CIT v. Anuja A Sheth, HUF 324 ITR 191. Therefore, he has submitted that the order passed by the Assessing Officer cannot be said that it is prejudicial to the interest of Revenue. 17. On the other hand, the ld. DR has submitted that the Assessing Officer, without making any enquiry, simply allowed the claim of the assessee. Therefore, it is erroneous and prejudicial to the interest of Revenue and the ld. CIT has rightly exercised the jurisdiction on this ground and requested that the same may be upheld. 18. We have heard both sides and gone through the orders of authorities below. The issue involved in this appeal is relating to set off of brought forward loss and benefit under section 112 of the Act. In the assessment order, the Assessing Officer has not examined the issue at all and simply allowed the claim of the assessee. The argument of the ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mine the claim of the assessee with regard to set off of brought forward capital loss and benefit under section 112 of the Act. In the assessment order, the Assessing Officer has clubbed both the issues of set off of brought forward capital loss and benefit under section 112 of the Act and denied the claim of the assessee. On appeal, the ld. CIT(A) allowed the benefit under section 112 of the Act to the assessee. In so far as brought forward capital loss is concerned, by considering the explanation given by the assessee, the ld. CIT(A) has directed the Assessing Officer to verify the claim of the assessee and allow the same. 22. On being aggrieved, the Revenue is in appeal before the Tribunal in respect of set off of brought forward capital loss as well as benefit under section 112 of the Act. The ld. DR has submitted that the assessee neither eligible for set off of brought forward capital loss nor benefit under section 112 of the Act. 23. On the other hand, the ld. Counsel for the assessee has relied on the judgement of the Hon'ble Bombay High Court in the case of CIT v. Anuja A Sheth, HUF 324 ITR 191. 24. We have heard both sides, perused the materials on record and gon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Further, before the ld. CIT(A), the assessee has placed reliance on the certificate dated 21.08.2009 issued by the Sundaram BNP Paribas Mutual, which reads as under: "This is to certify that Sundaram BNP Paribas Mutual (formally known as Sundaram Mutual Fund) is registered with Securities and Exchange Board of India (SEBI) vide Registration No.MF/034/97/2. Sundaram BNP Paribas Bond Saver (formally known as Sundaram Bond Saver) is a scheme floated by Sundaram BNP Paribas Mutual and the units under the Scheme are securities as defined under the Securities Contracts (Regulation) Act 1956." However, we find that before the Assessing Officer, the assessee has not filed the above certificate and copies of registration with SEBI. Accordingly, it is fresh evidence, which was produced before the ld. CIT(A), which is the basis for his conclusion. In our opinion, it is appropriate to remit the issue to the file of the Assessing Officer for fresh consideration. 27. Since the set off of brought forward capital loss and benefit under section 112 of the Act are interlinked, we set aside the order passed by the ld. CIT(A) on these issues and, in view of the above findings, the Assessing O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... td v. DCIT (320 ITR 81) has held that the operation of Rule 8D is only prospective and not retrospective. In view of that judgment, Rule 8D does not apply to the impugned assessment year 2005-06. I.T.A. T. Mumbai Bench 'G' in the case of M/s Godrej Agrovet Ltd. v. ACIT (2010- T/OL-ITAT-MUM) has held that Rule is prospective in nature and therefore, cannot be applied in respect of earlier assessment years. In view of the above, we vacate the direction of the Commissioner of Incometax (Appeals) and confirm 2% disallowance made by the assessing authority and accordingly allow this ground raised by the assessee." It is clear from the above that provisions of rule 8D, which has been notified with effect from 24.03.2008, shall apply with effect from assessment year 2008-09 onwards. Since the assessment year involved is A.Y. 2006-07, provisions of rule 8D will not apply for the impugned assessment year. In view of the above facts and respectfully following the decision of the Hon'ble ITAT in appellant's own case, the AO is directed to restrict the disallowance to 2% of the exempt income. Accordingly, this ground is partly allowed." 30. After hearing both sides, we find that the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peal regarding disallowance of additional depreciation confirmed by the CIT(A) by order dated 21.02.2011. Subsequently during discussions with our advocates we were advised that it is better we should file an appeal against the order of the first appellate authority to the tribunal. I submit that the omission to file the appeal was because of the mistaken interpretation of the provisions by me and it was inadvertent and not willful." 33. The ld. DR has strongly objected for condoning such huge delay in filing the appeal. 34. We have heard both sides. We find that the reasons for the delay as explained by the assessee in the affidavit that the assessee has afraid that the Assessing Officer may levy penalty under section 271(1)(c) of the Act and the Advocate has advised that it is better to file an appeal and accordingly the appeal was filed with delay. The assessee is a limited company having its own team of Legal Advisors. Without filing the appeal in time and explaining that because penalty is levied and on the advice of the Advocates, the assessee has filed the present appeal is not sufficient cause to condone such a huge delay of 980 days. From the reasons stated in the affid ..... X X X X Extracts X X X X X X X X Extracts X X X X
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