TMI Blog2018 (6) TMI 415X X X X Extracts X X X X X X X X Extracts X X X X ..... hat item. AO has created an artificial distinction on that ground. After going through the order of the CIT(A) we are satisfied that the ld.CIT(A) has examined the issue with all possible angle, and thereafter held that depreciation is admissible to the assessee. Therefore, we do not find any merit in this ground of appeal Additional depreciation on account of non-user of the machinery over a period of 180 days - Held that:- Assessee had earned the benefit as soon as he had purchased the new plant and machinery in full but it is restricted to 50% in that particular year on account of period of usages. Such restrictions cannot divest the statutory right. Law does not prohibit that balance 50% will not be allowed in succeeding year. The extra depreciation allowable u/s 32(1) (iia) in an extra incentive which has been earned and calculated in the year of acquisition but restricted for that year to 50% on account of usage. The so earned incentive must be made available in the subsequent year. The overall deduction of depreciation u/s 32 shall definitely not exceed the total cost of plant machinery. We set aside the orders of the authorities below and direct to extend the benefit. - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this regards, we submit as under: During the year, we have claimed total exempt income u/s 80P as under: Particulars Amount Rs. Amount Rs. Basic Exemption: 80-P(2)(c) 50,000 Interest from Co-operative societies: 80P(2)(d) 95,17,270 Less: Interest Paid (13,202) 95,04,068 Dividend from Co-operative societies: 80P(2)(d) 1,19,98,000 Total Exempt Income claimed u/s SOP 2,15,52,068 The details of party wise interest and dividend received and claimed exempt u/s.80P of the Act is enclosed at Annexure -A. Relevant portion of the section SOP is reproduced below. 80P, (1) Where, in the case of an assessee being a co-operative society, the gross total income includes any income referred to in sub-section (2), there shall be deducted, in accordance with and subject to the provisions of this section, the sums ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e rely on the Supreme Court decision in the case of Munjal Sales Corporation 298ITR 298 and Bombay High Court decision in the case of Reliance Utilities and Power Ltd. 313 ITR 340 where it is held that in case of mixed funds available i.e. interest free and interest bearing (like loan, etc.) then a presumption would arise that investments would be out of interest free funds, if interest free funds are sufficient to meet the investments and therefore, no proportionate reduction should be made from the deduction claimed u/s 80P(2) (d) by the assessee Union. We further rely on the recent IT AT decision in our own case. (ITA2613/Ahd/2012)forA.Y. 2009-10 where disallowance u/s.80P(2)(d) was deleted and no interest was deducted from the interest received as there were sufficient interest free funds. ; Copy of the said decisions are attached herewith at Annexure-B. 4. The ld.AO has gone through the explanation of the assessee and observed that the assessee has huge borrowed funds of ₹ 29.21 crores, whereas it is having capital of ₹ 10.19 crores and total reserve of ₹ 53.43 crores. According to the AO if accumulated profits of last 48 years is being added agai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat angle. He ought to have identified the expenditure attributable of earning of interest income amounting to ₹ 95,17,270/- as well as for earning the alleged dividend income from other cooperative societies. We have extracted the reply given by the assessee. It has already deducted interest paid of ₹ 13,202/-. Meaning thereby, net interest income of ₹ 95,04,068/- has been claimed as exempt under section 80P(2)(d) of the Act. The AO presumed that the assessee must have utilized interest bearing funds for making investment, therefore, the whole of income earned by way of dividend and interest deserves to be treated as disallowed with help of section 14A. The AO ought to have carved out specific expenditure relatable to the earning of such income, and thereafter worked out net dividend income as well as interest income on which deduction under section 80P(2)(d) could be allowed. He did not take such step. Nevertheless, we have examined the facts in the light of earlier years decisions. The assessee has demonstrated availability of funds as highlighted in sub-paragraphs (iii) and (iv) of its reply submitted before the AO vide letter dated 10.9.2014. It is pertinent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e have gone through the record carefully. A perusal of the order of the ld.CIT(A) would indicate that there is no distinction between the expression plant for allowing normal depreciation vis- -vis additional depreciation on that item. The ld.AO has created an artificial distinction on that ground. After going through the order of the ld.CIT(A) we are satisfied that the ld.CIT(A) has examined the issue with all possible angle, and thereafter held that depreciation is admissible to the assessee. Therefore, we do not find any merit in this ground of appeal. It is rejected. 13. Ground No.3: Grievance of the Revenues is that the ld.CIT(A) has erred in deleting disallowance of ₹ 1,12,73,290/-. 14. Brief facts of the case are that the assessee has made addition to its plant machinery which is eligible for grant of additional depreciation under section 32(1)(ii) of the Act. This plant machinery was used for less than 180 days in the preceding year. The assessee claimed that the additional depreciation for remaining period of 180 days ought to be allowed in subsequent year i.e. in the present assessment year. The ld.AO was of the view that such additional depreciation is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wed in respect of_ (A) Any machinery or plant which, before its installation by the assesses was used either within or outside India by any other person; or (B) Any machinery or plant installed in any office premises or any residential accommodation, including accommodation in the nature of a guest-house or (C) Any office appliances or road transport vehicle, or (D) Any machinery or plant, the whole of the actual cost of which is allowed as a deduction (whether by way of depreciation or otherwise) in computing the income chargeable under the head profits and gains of business or profession of any previous year. Thus, this incentive in the form of additional sum of depreciation is not available to any plant or machinery which been used either within India or outside India by any other person or such machinery and plant are installed in any office premises or any residential accommodation, including accommodation in the nature of a guest house or any office /appliances or road transport vehicles, or any machinery or plant the whole of actual cost of which is allowable as deduction (where by way of depreciation or otherwise) in computing under the head Profit and gains of bus ..... X X X X Extracts X X X X X X X X Extracts X X X X
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