9911796707
TMI Blog2015 (1) TMI 1348X X X X Extracts X X X X X X X X Extracts X X X X ..... ad given interest free advances of Rs. 4.70 crore to M/s.Casil Health Products Limited (CHPL), sister concern of the Assessee and hence, interest expenses to that extent were not deductible u/s 36(1)(iii) ?" (C) Whether the Appellate Tribunal has substantially erred in law in deleting the disallowance of depreciation on building and plant and machinery for Rs. 28,77,600/- despite the fact that the Assessee has not produced any cogent evidence regarding use of the said plant purchased on 15.2.2006 from Pfizer, during the year under consideration and whether the Appellate Tribunal has not appreciated the fact that the appellant did not discharge its onus to prove that the plant was used for the purpose of business ? (D) Whether the Appellate tribunal has substantially erred in law in deleting the addition of Rs. 52,59,803/- in calculation of adjusted book profit for the purpose of MAT considered as towards provision for doubtful debt and diminution in the value of investment relying on the decision of coordinate Bench in the case of ACIT vs. Vodafone Essar Gujarat Limited ? (E) Whether the Appellate tribunal has substantially erred in law in deleting the addition of the provisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ticals Ltd v. ACIT (ITAT, Mum) reported at 43 SOT 423?" 12. We may record that question 'E' in the appeal memo is an additional question which has an element of above noted question. We have, therefore, not separately reproduced the same in this order. The issue is whether the assessee who has incurred expenditure for scientific research, which was not in the in house facility, could be covered for deduction under section 35(2AB) of the Income Tax Act, 1961." 11.1 The Hon'ble High Court of Gujarat after examining the entire issue came to the conclusion that the Tribunal committed no error. Respectfully following the judgement of Jurisdictional High Court in the case of CIT vs. Cadila Healthcare Ltd.(supra), we hereby direct the AO to allow the claim of the assessee. Thus, this ground of assessee's appeal is allowed. 4. The aforesaid shows that the Tribunal for allowing this particular ground/question in favour of the Assessee, has relied upon the decision of this Court in the case of CIT vs. Cadila Healthcare Limited, reported in (2013) 31 Taxmann.com 300 (Gujarat). We find that as the question is already covered by the said decision of this Court, such questio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant had sufficient own funds. The ld.CIT(A) observed that the amount outstanding against associatecompany is in the nature of advance since appellant has not recovered the same. It this was business advance, the same could have been recovered or adjusted by now but the fact that it remain outstanding for many years clearly shows that this is interest free advances given out of overall business fund which included borrowed funds also. The contention of the assessee before the authorities below was two folds; firstly, advances were given for business purposes, therefore provisions of section 36(1)(iii) cannot be applied and secondly, the assessee was having sufficient interest free funds to make advances. The judgement relied upon by the ld. counsel for the assessee in the case of CIT vs. Raghuvir Synthetics Ltd. (supra), wherein the Hon'ble High Court of Gujarat relying on the judgement of the Hon'ble Apex Court in the case of S.A.Builders Ltd. vs. CIT reported in (2007) 288 ITR 01 (SC) answered the question in favour of assessee. In the present case, both the authorities have made addition on the basis that the advances given have been continuing for a long period of time. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITR 222 (Gujarat) and has allowed the appeal to that extent in favour of the Assessee. When the question is already covered by the above referred decision of this Court, we do not find that any substantial question would arise for consideration, as canvassed. 7. On question (C), the Tribunal has considered the said aspect at paragraphs 16, 17, 17.1, which reads as under:- 16. Ground No.8 is against confirmation of disallowance of depreciation of Rs. 28,776,600/on building and Plant & Machinery. The ld.counsel for the assessee submitted that the authorities below were not justified in disallowing the claim. He placed reliance on the judgement of Hon'ble Gujarat High Court rendered in the case of ACIT vs. Ashima Syntex Ltd. reported at 251 ITR 133. He submitted that the details were given with regard to installation of the machinery as well as the commencement of the production by producing electricity power consumption bill, registration of excise, etc. He submitted that the authorities below failed to appreciate the fact that it was not necessary that the production so made should be sold, in fact the assessee had furnished evidence of commencement of the production. He subm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s required to be installed and even thereafter additional machinery was required to be installed. In the instant case, plant and machinery were installed and it worked smoothly. There may be certain machines, which in view of the latest technology, that require no trial run. If separate parts are fitted and the machine is brought in existence, it may require trial run, but if machinery is imported and merely it is fixed here, it does not mean that the machine would not work. Ultimately, on evidence, the Tribunal has found that 2,68,412 mtrs. of grey cloth was manufactured. Law does not require that there must be optimum production for granting the benefit. Law only required that there must be use of plant and machinery for the purpose of business. Use of such words that plant and machinery was run more extensively or was required to be used for larger production, is not to be found in the Act or Rules. Whether the plant and machinery were upto the extent of its efficiency is irrelevant for the purpose of deciding depreciation. The test is that building, plant and machinery are used for the purpose of business. It is not even necessary that in a year it must have been used for a par ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
