TMI Blog2016 (10) TMI 841X X X X Extracts X X X X X X X X Extracts X X X X ..... gh Court allowed the depreciation claimed by the assessee. In the result this ground of appeal raised by the assessee in the present appeal is allowed. Disallowance under section 14 A - Held that:- During the course of assessment proceeding the assessee submitted that amount of ₹ 4,21,908/-can be taken for disallowance under section 14 A. The voluntary disallowance was not accepted by AO, and AO worked out the disallowance as per the procedure prescribed in Rule 8D (2)(iii) of ₹ 35,32,795/-and added to the total income of assessee. The coordinate bench of this tribunal in assessee’s own case, restricted the disallowance under section 14A at ₹ 10,000/- only as referred above. Thus, keeping in view the order of the Tribunal for AY 2009-10 the disallowance made by AO for ₹ 35,32,795/- under section 14A is deleted. In the year under consideration the exempt income of assessee consist of income from the tax free bonds of ₹ 2,24,91,102/-, dividend income of ₹ 1,47,24,682/-, interest on PPF ₹ 2,28,190/- and LTCG of ₹ 2,93,35,787/-. Major investments were made in earlier years and exempt income is from Government securities. The payments ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filed the present appeal before us raising as many as 11 grounds of appeal. Though the assessee has raised 11 grounds of appeal but as per our considered opinion only 3 substantial grounds arises in the present appeal for our consideration which are as under; (a) If the Learned CIT (A) erred in confirming disallowance of additional depreciation of ₹ 85,80,000/-in respect of plant and machinery installed in windmill project. (b) If Learned CIT(A) erred in confirming disallowance of ₹ 35,32,795/- under section 14 A, read with rule 8D. (c) If the Learned CIT(A) ought to have given the direction in respect of short credit of TDS. 3. First ground of appeal for our consideration is with regard to disallowance of additional depreciation in respect of plant and machinery installed in windmill project. We have heard ld AR of assessee and ld DR for revenue and further perused the material available on record. Ld AR of assessee argued that during the year under consideration, the assessee installed a windmill at Jaisalmer in Rajasthan and the production was started in January 2011. The assessee is entitled for additional depreciation as the same is available t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... time. However, the ld CIT(A) concluded that the said provision would be applicable in case of an assessee engaged in the business of manufacture or production of any article of things. After the amendment of the said section with effect from 01.04.2013, the benefit of the section was extended to an assessee who was engaged in the business of generation and distribution of power. The business of manufacture or production of any articles or thing is different from the business of generation and distribution of power. The Ld CIT(A) further concluded that no document or evidence was brought on record to show that windmill business was set up as a part of existing business by the assessee. Since, the independent business of generation of electricity was set up by the assessee in AY 2011 12 and no benefit of initial or additional depreciation was available to the assessee during the assessment year. Ld AR of the assessee had argued that there is no restriction in the provision of clause (iia) of section 32(1), which may restrict the assessee from claiming additional depreciation only because the assessee is also engaged in other business. The Hon ble Madras High Court in VTM Ltd (s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8D cannot be applied to the facts of the instant case blindly. As submitted by landed AR, the assessing officer did not address various contention of the assessee during the year under consideration, before working out the disallowance under Rule 8D(2)(iii) of IT Rules, that is, the disallowance relating to a devastating expenses computed at 0.5% of average value of investments. It is also a fact that the AO did not make any disallowance toward interest expenditure. 5. From the foregoing discussion, and on consideration of the accounts of the assessee, we are of the view that the tax authorities were not justified in applying Rule 8D(2)(iii) by disregarding the accounts and claims of the assessee. According to the assessee, he had made the investment in the earlier years and major portion of exempt income from government securities. However, the ld AR could not conclusively clarify that the different concern are not operating from different addresses. Accordingly, on a conspectus of the matter, we are of the view the disallowance under section 14 A, may be restricted to ₹ 10,000/-and the same, in our view, would meet the end of Justice. Accordingly, we modified the ord ..... X X X X Extracts X X X X X X X X Extracts X X X X
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