TMI Blog2017 (2) TMI 1092X X X X Extracts X X X X X X X X Extracts X X X X ..... ion as per the provisions of the law. Section 32 (1) (iia) contains the provisions for the allowability of additional depreciation. As mentioned elsewhere, u/s. 57(ii) deductions are allowed as provided in Sections 30, 31 & 32 of the Act and since the legislature has not specified any provision in respect of any sub-clause in these sections, all the deductions provided in these sections have to be allowed accordingly.. We accordingly held that the assessee is entitled for additional depreciation and the A.O. is directed accordingly. Unabsorbed depreciation - The definitions of "actualcost" and "written down value" in Section 43. We accept the submissions made on behalf of the assessee that if the unabsorbed depreciation is not allowed to be deducted, the assets which remain the same whether used in business and yielding income from the business or whether they are let out and earn income from other sources, there will be an anomaly as the same assets would have different written down values and different rates of depreciation for the purpose of deductions under Section 57 than that which would be computed if the assets earn business income. Reading the relevant sections, it appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sorbed deprecation and allowability of interest emanate from the main issue of taxability of rental income. 4. The assessee in its appeal in ITA No. 2438/Ahd/2010 has also challenged the service of notice u/s. 143(2) of the Act as barred by limitation. The ld. Senior Counsel fairly conceded that this issue is not pressed; therefore, the same is dismissed as not pressed. The assessee has also challenged the taxability of the rental income under the head Income from other sources . It is the claim of the assessee that the income from lease rental should have been taxed under the head Profit and gains of business or profession . Subsequent conduct of the assessee prompts us to dismiss this grievance of the assessee because in subsequent years, the assessee itself has shown the lease rental income under head Income from other sources . Therefore, without going into the merits of this claim of the assessee and considering the subsequent conduct of the assessee, this grievance of the assessee is also dismissed. 5. Now we will consider the allowability of depreciation, additional depreciation and carry forward of unabsorbed depreciation. 6. Rival contentions have been heard at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sallowing the claim of depreciation is that Section 30, 31 32 fall under part B of the Act which deal with the computation of income under the head Profits and gains of business or profession . 12. We find that Under Clauses (ii) and (iii) of Section 57 in cases of income arising out of hiring of machinery, plant and furniture, the Legislature intended to confer the same benefit on the same terms as was available in respect of income under the head Profits and gains of business or profession on account of certain specified items of expenditure or deduction. The scheme appeared to be not to allow all deductions available for computing the income under the head Profits and gains of business or profession in respect of income arising out of letting out of plant, machinery and furniture but to allow deductions under certain specified heads which had a direct relationship with plant, machinery, etc. The deductions allowed were in the nature of expenditure on account of repairs, insurance and also deduction in respect of depreciation on the plant and machinery. Whether the income from such plant and machinery arose under the head Profits and gains of business or profession or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the afore-stated discussions, in our considered opinion, the A.O. ought to have allowed depreciation as per the provisions of the law. 17. Section 32 (1) (iia) contains the provisions for the allowability of additional depreciation. As mentioned elsewhere, u/s. 57(ii) deductions are allowed as provided in Sections 30, 31 32 of the Act and since the legislature has not specified any provision in respect of any sub-clause in these sections, all the deductions provided in these sections have to be allowed accordingly. The ratios laid down by the Hon ble Supreme Court mentioned elsewhere squarely apply to this issue also. We accordingly held that the assessee is entitled for additional depreciation and the A.O. is directed accordingly. 18. The next claim of the assessee is that the unabsorbed depreciation. Referable to the income from lease rent should be carried forward even if the lease rental income is treated as income from other sources. 19. In our understanding of the law, the prescribed percentage of depreciation under Section 32(1) in any event had to be allowed so far as current depreciation was concerned irrespective of the fact whether the assets were yielding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess or profession . In our considered opinion, the interest should have been allowed on pro rata basis. We accordingly direct the A.O. to deduct interest proportionately from the income taxed under the head Profits and gains of business or profession and Income from other sources . We hold accordingly. 26. For the similar reasons the depreciation need to be bifurcated proportionately in A.Y. 2006-07 between the heads Profits and gains of business or profession and Income from other sources . 27. We summarize our findings as under:- (i) The lease rental income has to be taxed under the head Income from other sources . (ii) The assessee is entitled for depreciation as per the provisions of the law. (iii) The assessee is also entitled for additional depreciation as per the provisions of the law. (iv) In A.Y. 2006-07, the A.O. must allow the deduction of interest and depreciation proportionately between the two heads of income. 28. In the result, the appeal filed by the Assessee is partly allowed and the appeals of the Revenue are dismissed. 29. Before parting in ITA No. 2501/Ahd/2010, the Revenue has also challenged the admissibility of additional eviden ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
