TMI Blog2013 (1) TMI 863X X X X Extracts X X X X X X X X Extracts X X X X ..... f disallowance of depreciation claimed by the assessee @100%(80%+20%) on Transformer, which, in fact, was not a Energy Saving Device. 2. That the Ld. CIT(A) has erred in law and on facts in ' restricting the disallowance of interest to @ 15% instead of rate applied by the A.O. @ 18% in respect of interest paid to the persons specified u/s 40A(2)(b). 3. That the Ld. CIT(A) has erred in law and on facts in deleting the addition of ₹ 1,21,409/- made by the A.O. on account of disallowance of depreciation claimed by the assessee on Lathe Machine which was not put to use and there was no increase in the production of the assessee company. 4. The order of the Ld. CIT(A) be set aside and that of A.O. be restored. 5. That the appellant craves leave to add or amend any ground of appeal before it is finally disposed off. 4. The assessee in C.O.No.38/Chd/2012 has raised following grounds of appeal: 1. That the learned CIT(A)-II, Ludhiana, has erred in holding that the equipment known as Airier Vent Wind Driven Ventilators is in the nature of ft machinery entitled to depreciation @ 35% as against higher depreciation claimed by the appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve also perused the relevant purchase bill of transformer. The following description is given in the bill: Electrical Transformer (distribution) 2000 KVA, 11KV/433V, oil Cooled Copper wound, with OLTC, RTCC AVR. The only issue is whether the equipment purchased by the appellant is an energy saving device and is eligible for depreciation @ 80%+20%. The appellant has claimed that the said machinery is an automatic electric load monitoring system which falls under clause B(a) of the schedule of rate of depreciation relevant for A/Y 2007-08. In this regard the appellant explained that transmission of electrical energy is made at a high voltage with a view to prevent loss of electrical energy during transmission if after such transmission any plant machinery are used to step down the high voltage transmission to lower voltage transmission, such plant machinery for stepping down the high voltage to lower voltage are part of the larger system of saving electrical energy. The appellant also submitted a certificate from the seller to this effect. This issue had been considered by the Hon'ble High Court of Orissa in the case o lndustrial Development Corporation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at in fact it provided the interest @ 12% to 14% against mortgage of property/other assets. In view thereof, the CIT (Appeals) had restricted the rate of interest to 15% as against 18% claimed by the assessee. 13. We find no merit in the plea of the assessee that similar rate of interest being allowed in the earlier year should be allowed in the instant year also, as each year of the assessment is independent and the facts of each case are to be considered for deciding the issue. The disallowance under section 40A(2)(a) of the Act is to be computed in line with the market conditions and admittedly there was lowering of interest rate from year to year. In view thereof, we are in conformity with the order of the CIT (Appeals) in allowing interest paid to the specified persons under section 40A(2)(b) of the Act @ 15%. Thus ground No.2 raised by the Revenue and ground No.3 raised by the assessee in Cross Objection are dismissed. 14. The issue in ground No.3 raised by the Revenue is against allowance of depreciation on lathe machine purchased by the assessee, which was not put to use. The Assessing Officer had disallowed the claim of depreciation of lathe machine as the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 18. In the facts of the present case before us, the assessee had claimed depreciation on lathe machinery which was purchased on 20.3.2007 and was ready for use as on 30.3.2007. In view of the ratio laid down by the Hon'ble Punjab Haryana High Court and following the same we uphold the order of the CIT (Appeals) and dismiss ground No.3 raised by the Revenue. C.O.No.38/Chd/2012: 19. The ground No.1 raised by the assessee vide its Cross Objection is against restriction in the rate of depreciation to be allowed on Airier Vent Wind Driven Ventilators. The assessee had purchased 14 number of 24 of Airier Vent Wind Driven Ventilators for total cost of ₹ 1,07,920/- on 13.2.2007. The assessee had claimed depreciation @ 50% on the said asset which was purchased after 30.9.2006. The claim of the assessee was that the equipment purchased was air pollution controlling system and hence entitled to depreciation @ 100%. The Assessing Officer held that the said device was only like an exhaust fan and allowed depreciation @ 17.5% resulting in disallowance of ₹ 35,074/-. 20. The CIT (Appeals) upheld the order of the Assessing Officer observing that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to allow depreciation @ 100% i.e. 50% for the year under consideration as the assessee had installed the said asset after 30.9.2006. The ground No.1 raised by the assessee in its Cross Objection is thus allowed. 26. The ground No.2 raised by the assessee in its Cross Objection is against the restriction in the claim of depreciation on tools and dyes. 27. The brief facts relating to the issue are that the assessee had claimed depreciation on tools and dyes and had also claimed additional depreciation on the same. However, the assessee was getting some of the amount of tools and dyes reimbursed from the buyers. The assessee was debiting the reimbursement of said tools and dyes as capital expenditure in the books of account and as and when it receives the same, it was reduced from the opening balance. The Assessing Officer held the accounting treatment to be incorrect and held that the amount reimbursed should have been reduced from the additions made to tools and dyes during the year and accordingly, no depreciation on the said tools and dyes to the extent of reimbursement received was allowable. The assessee during the year under consideration had received sum of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evenue and the same is dismissed. 31. The issue in ground No.4 is in relation to the disallowance worked out under section 14A r.w.r. 8D of Income Tax Rules. The Assessing Officer and the CIT (Appeals) had disallowed sum of ₹ 59,419/- under section 14A of the Act r.w.r. 8D of Income Tax Rules. 32. The learned A.R. for the assessee fairly pointed out that the disallowance was on account of interest attributable to tax free investments which were made in the fag of the year and disallowance had to be worked out from the date of investment and not for the full year. 33. The learned D.R. for the Revenue placed reliance on the orders of the authorities below. 34. We have heard the rival contentions and perused the record. IN view of the confession made by the learned A.R. for the assessee we uphold the disallowance made under section 14A of the Act. However, we direct the Assessing Officer to verify the claim of the assessee that the interest relatable to the period from the date of the investment till the close of the year is to be computed and disallowed and there is no merit in disallowing the interest relatable to the full year. The ground No.4 r ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
