TMI Blog2018 (8) TMI 1639X X X X Extracts X X X X X X X X Extracts X X X X ..... hat:- Co-ordinate Bench of this Tribunal in the case of REI Agro Ltd. [2013 (9) TMI 156 - ITAT KOLKATA] had held that only those investments which had yielded dividend income to the assessee are to be considered for the purpose of computing disallowance under third limb of Rule 8D(2) of the Rules. Accordingly, we direct the ld. AO to re-compute the disallowance in the light of above mentioned decision of this Tribunal for the purpose of normal computation of income under the Act. Disallowance u/s 14A read with Rule 8D of the Rule while computing the book profits u/s 115JB we find that this issue has been decided by the Hon’ble Special Bench of Delhi Tribunal in ACIT vs. Vireet Investment Pvt. Ltd [2017 (6) TMI 1124 - ITAT DELHI] held that the computation under clause (f) explanation (1) to section 115JB(2) is to be made without resorting to the computation as contemplated u/s 14A read with Rule 8D - in the present case assessee had not furnished the workings and the basis of arriving on the disallowance figure of ₹ 24,000/- u/s 14A before us. Hence AO is directed to examine the accounts of the assessee and the workings for ₹ 24,000/- disallowed u/s 14A by the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O observed that the said decision has been stayed by the Hon ble Supreme Court and accordingly disallowed the provision for leave encashment on the ground that the same is allowable only on payment basis in terms of section 43B(f) of the Act, which was upheld by the ld CITA. Aggrieved, the assessee is in appeal before us . 2. 2. We have heard the rival submissions. We find that though the Hon ble Calcutta High Court in the case of Exide Industries Ltd vs Union of India reported in 292 ITR 470 (Cal) had struck down the provisions of section 43B(f) of the Act as unconstitutional, the revenue had carried the matter further to the Hon ble Supreme Court which initially in Special Leave to Appeal (Civil) CC 12060 / 2008 dated 8. 9. 2008 had held as under:- The petition was called on for hearing today. Upon hearing counsel the court made the following Order. Issue Notice. In the meantime, there shall be stay of the impugned judgement, until further orders. Later the Hon ble Supreme Court in Special Leave to Appeal (Civil) No(s). CC 22889 / 2008 dated 8. 5. 2009 had held as under:- The petition was called on for hearing today. Upon hearing cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts which had yielded dividend income to the assessee are to be considered for the purpose of computing disallowance under third limb of Rule 8D(2) of the Rules. Accordingly, we direct the ld. AO to re-compute the disallowance in the light of above mentioned decision of this Tribunal for the purpose of normal computation of income under the Act. Accordingly, ground no. 2(a) raised by the assessee is allowed for statistical purpose. 3. 3. With regard to disallowance u/s 14A read with Rule 8D of the Rule while computing the book profits u/s 115JB of the Act in the sum of ₹ 6,41,255/- is concerned , we find that this issue has been decided by the Hon ble Special Bench of Delhi Tribunal in ACIT vs. Vireet Investment Pvt. Ltd. reported in [2017] 82 Taxmann. Com 415 (Del. Trib. )(SB) wherein it was held as under: 6. 2. 2. In view of the above discussion, we answer the question referred to us in favour of assessee by holding that the computation under clause (f) explanation (1) to section 115JB(2) is to be made without resorting to the computation as contemplated u/s 14A read with Rule 8D of the Income Tax Rules, 1962. We find that the ld. AO had disallowed a sum of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al was, whether the additional depreciation, in the sum of ₹ 8,03,233/- could be claimed by the assessee in the relevant assessment year, i. e. , the assessment year 2011-12, in respect of machinery, which was purchased and used for less than 180 days, in the previous year, 2009-10 (i. e. , the assessment year 2010-11). 7. The Tribunal, relying upon its own judgment in the case of Fresh Honest Cafe Ltd. V. DCIT, dated 10. 08. 2016, passed in I. T. A. No. 1373/Mds/2016 allowed the appeal of the Assessee. 7. 1. Pertinently, in the judgment of the Tribunal, delivered in the case of Fresh Honest Cafe Ltd. V. DCIT, reliance was placed on the judgment of the Karnataka High Court in the case of : CIT V. Rittal India (P. ) Ltd. , [2016] 66 taxmann. com 4 (Karnataka). 7. 2. The issue, which arose for consideration before the Tribunal in the Fresh Honest Cafe Ltd. V. DCIT, was also, whether the Assessee could be allowed balance additional depreciation in the relevant A. Y. , following the A. Y. , in which, the machinery had been purchased, and put to use, albeit, for a period of less than 180 days. 7. 3. The Tribunal has, thus, in the context of the provis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e proviso incorporated therein. The Karnatake High Court, in the said case, has come to the conclusion that additional depreciation granted under clause (iia) of Section 32(1) of the Act is for the purpose of affording benefits to the Assessees and, to encourage industrialization, either by setting up a new industrial unit, or, by expanding a new industrial unit, by purchasing and installing a new machinery, or, plant, and putting the same to use for the purposes of business. 8. 1. The Court, went on to say, that while, the proviso appearing in Section 32(1) restricts the claim of depreciation to 50% of the amount calculated at the percentage prescribed for an asset referred to in clause (iia), nowhere does it restrict allowance of the balance 50% of the additional depreciation, which in percentage terms, would be 10% in the succeeding A. Y. 8. 2. The relevant observations made by the Division Bench of the Karnataka High Court in the case of CIT V. Rittal India (P. ) Ltd. , as contained in paragraphs 7, 8 and 9 of the said judgment, for the sake of convenience are extracted hereafter : . . . . . 7. Clause (iia) of Section 32(1) of the Act, as it now stands, was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vesting in and making use of new plant and machinery. 10. 1. The plain language of Section 32(1)(iia) read along with the relevant proviso would have us come to the conclusion that, there is no limitation in the assessee claiming the balance 10% of additional depreciation in the succeeding assessment year. 10. 2. As a matter of fact, with effect from 01. 04. 2016, the ambiguity, if any, in this regard, in the mind of the Assessing Officer, stands removed by virtue of the Legislature, incorporating in the Statute, the necessary clarificatory amendment. 10. 3. The amendment brought in the relevant proviso obtaining in Section 32, reads as follows: 32. (1) . . . . . . Provided also that where an asset referred to in clause (iia) or the first proviso to clause (iia), as the case may be, is acquired by the assessee during the previous year and is put to use for the purposes of business for a period of less than one hundred and eighty days in that previous year, and the deduction under this sub-section in respect of such asset is restricted to fifty per cent of the amount calculated at the percentage prescribed for an asset under clause (iia)for that pre ..... X X X X Extracts X X X X X X X X Extracts X X X X
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