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ACIT, Cir. 6, Ahmedabad Versus M/s. Indo German Tool

2017 (5) TMI 123 - ITAT AHMEDABAD

Depreciation on lease hold building and plant & machinery - disallowance - case of Revenue is that since building and infrastructure were stated to have been provided by the Govt. of Gujarat/Govt. of India/German Government, depreciation claimed by the assessee and allowed in the assessment mainly on lease holding building and plant & machinery was not in order - whether the contributions made by three governments, viz. Govt. of India, Govt. of Gujarat and German Government was to be treated as .....

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f assessees by exercising its Legislative powers. The ld.CIT(A) has considered this aspect and therefore allowed the claim of the assessee. After going through the order of the ld.CIT(A), we do not find any error in it - appeal dismissed - decided against Revenue. - ITA No.78 and 79/Ahd/2014 - Dated:- 1-5-2017 - SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER For The Revenue : Shri K. Madhusudan, Sr.DR For The Assessee : None ORDER PER RAJPAL YADAV, JUDICIAL MEMBER: .....

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in deleting the disallowance of ₹ 2,58,77,712/- and ₹ 1,70,51,660/- for the Asstt.Years 2007-08 and 2008-09 respectively, which were disallowed by the AO out of claim of depreciation on lease hold building and plant & machinery. 4. In response to the notice of hearing an adjournment application was filed by Shri Chirag Shah vide letter dated 24.1.2017. Respected Sir, With reference to above appeal has been fixed for hearing before you on Dt. 31/01/2017. However, as factual detai .....

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We find that on record he has not filed his power of attorney and he has not assigned any reason for the adjournment. Application is vague and none has attended the hearing on behalf of the assessee. It appears that Shri Chirag Shah thought that once an application was moved, there was no need to appear on behalf of the assessee, and adjournment would be granted as matter of right. We do not appreciate this type of conduct at the end of the assessee. Therefore, we do not grant adjournment to the .....

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production and training were provided by the German Government. Government of India provided funds for training, furniture, duties & taxes and recurring costs. Object of the assessee-society was to carry out activities of providing technical, advisory and consultancy services for small scale units and are providing services for developing products and training of personnel in tool room. The assessee has filed its return of income for the Asstt.Year 2007-08 on 29.10.2007 declaring a loss of .....

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, which has resulted escapement of tax, therefore, he issued notice of under section 148 on 28.3.2012 in both years. After hearing the assessee, he disallowed depreciation to the assessee. 7. Dissatisfied with the disallowance, the assessee carried out the matter in appeal before the ld.CIT(A). The ld.CIT(A) has allowed depreciation to the assessee by following order of the ITAT, Indore Bench. The ld.CIT(A) has observed that similar Societies were situated in Madhya Pradesh and Maharashtra, wher .....

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regulations. For the purpose of I.T.Act they are independent distinguishable entities, however, their operations are identical. The decision of Hon'ble ITAT Indore Bench in the case of Indo German Tool Room, Indore is on identical facts and I do not agree with the contentions of the A.O. that in the case of Indore unit the assets have been acquired by utilizing Government funds as well as own funds whereas in the case of the appellant the facts are different. The contributions for various a .....

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the contentions of the appellant that what has been provided by the various governments are in the nature of promoters contribution and have been duly reflected so in the balance sheet of the appellant. Applicability of explanation-10 to sec.43 will come into picture only when the receipts are in the form of subsidy. The Hon'ble ITAT while dealing with the case of Indo German Tool Room Indore on identical facts has deleted the disallowance of depreciation claim made by the A.O. by invoking e .....

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these funds and its own capital, it acquired plant and machinery and building. While allowing assessee's claim for depreciation on such plant and machinery and building, the A.O. reduced the actual cost by the amount of grant after applying Explanation 10 to Section 43. Horrjble Supreme Court in the case of P.J. 'N Chemicals (supra) has elaborately dealt with such a situation t! and observed that where Government subsidy is intended as an incentive to encourage entrepreneurs, the same i .....

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fully following the proposition of law as laid down by the Hon'ble Supreme Court and thereafter by various Courts, as narrated above, we do not find any merit in the action of the lower authorities for reducing the amount of Government grant from the actual cost of plant and machinery and building for the purpose of allowing assessee's claim for depreciation. Accordingly we reverse the order of lower authorities and decide the issue in favour of the assessee." The facts of the case .....

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