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TMI Blog2010 (3) TMI 1246X X X X Extracts X X X X X X X X Extracts X X X X ..... 1,43,15,579/- being depreciation on the plant and machinery by treating grant as deductible from the cost. The depreciation be allowed on the gross value as claimed. 4. The Ld. CIT(A) erred both in law and on facts in dismissing the ground for claim of depreciation at 100% on the temporary structures of Amul Parlour and thereby reducing the depreciation claim by ₹ 10,62,107/-. The Ld. CIT(A) ought to have allowed the depreciation at 100% as claimed. 5. The Ld. CIT(A) has grossly erred in mentioning that the ground with regard to assessee's contention that depreciation on Amul Parlours being in the nature of temporary construction be allowed at 100% was not pressed for the reason that the A.O. has rectified the same. It is submitted that no such rectification order has been passed by the A.O. granting depreciation at 100% on such temporary structures, and that observation and decision of Ld. CIT(A) that this ground was not pressed is not correct. It is submitted that the Ld. CIT(A) be directed to decide this issue on merits again after considering facts and circumstances of the case. 6. The Ld. CIT(A) patently erred both in law and on facts in confirming disallowance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is common contention that issue involved in this ground of appeal is covered against the assessee by order of the Tribunal dt.19.12.2002 in assessee's own case for the A.Ys. 1984-85, 1987-88 & 1988-89 in appeal Nos.1252 to 1253/Ahd/95. In the said order this Tribunal, following the decision of ITAT Ahmedabad Bench in the case of Mehsana Dist. Co-op. Milk Producers Union Ltd., in ITA No.2091/Ahd/90 and others dated 31.8.95 held that the AO had rightly denied deduction in respect of amount transferred to Reserve Fund account as required u/s. 67 of the Gujarat Cooperative Societies Act. We, therefore, respectfully following the same, reverse the order of Ld. CIT(A) and restore the addition of ₹ 76,19,692/-. 8.2. We therefore, respectfully following the aforesaid order of the Tribunal, hold that the CIT(A) has erred in directing the A.O. to allow deduction for the sum of ₹ 19,71,528/- transferred to Reserve Fund Account. The order passed by the CIT(A) is set aside and that of the A.O. is restored in relation to this point." 5. Since the facts and circumstances in the afore said case are similar to that of the issue under consideration, on the same line, we uphold th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Chemicals Works Ltd. (supra). The assessee has set up a milk processing plant called "Mother Dairy Plant" at Gandhinagar having milk processing capacity of 4 lac litres per day. The said project initially estimated at a cost of ₹ 16.04 crores was financed under the National Dairy Project-II/Operation Flood-III by the National Dairy Development Board. The financing by the NDDB is undertaken by 70% loan and 30% grant basis. As per the agreement dt.30th October,1991 signed between the assessee and NDDB what comes out is that by clause (1) of the agreement NDDB has given disbursement to borrowers a sum of ₹ 13058.98 lacs as grants towards part-finance for the project as per the terms and conditions. Subject to paragraph 4 of the agreement, the estimated cost for disbursement is stated as under:- Item. Estimated total Cost Amount of grant of (30% of cost) Processing facilities 37914.23 lacs 11,247.07 Technical inputs 4009.86 lacs 1,102.95 Milk marketing 395.86 lacs 118.53 17. The NDDB by clause (4) of the agreement has been given option that instead of giving the amount of grant by way of cash they can give specific machinery and/or equipment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f P.J.Chemicals Works Ltd., (1994) 210 ITR 830 (SC) held that subsidy is given for the project as a whole and not in respect of an individual asset. Therefore, it will not affect the actual cost of any specific Plant and Machinery and accordingly will not be reduced for calculating the depreciation. Since the issue is covered it does not require to take a different view than what has been taken by the Tribunal in earlier years. As a result, following the decision of the Tribunal in A. Y. 2000-01 we allow the claim of the assessee. This ground is accordingly allowed. 14. Ground No.4 relates to confirming the disallowance of depreciation of ₹ 10,62,107/- at 100% on structure which assessee calls as temporary structure. After going through the order of the Ld. CIT (A) we notice that A.O. has rectified his order u/s. 154 allowing the claim of the assessee. The related ground was not pressed before the Ld. CIT (A) by the assessee. In this regard we reproduce the relevant portion from the order of the CIT(A) as under :- "It has been contended in this ground of appeal that the A.O. has erred in allowing depreciation @ 10% on temporary structures of Amul Parlours as against 100% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... then whole object of implementation of relief work would be defeated. These 2 provisions were specifically incorporated to provide relief to the victims of Gujarat Earthquake and if the conditions laid down in these provisions are not complied with then 100% deduction should not be allowed. He finally held as under :- "As per the provisions of section 80G(5C) sub clause (iv), the unutilized portion of the donation had to be transferred to the P.M. National Relief Fund by 31.3.2004 but the appellant by its own admission has stated that a sum of ₹ 1 crore was transferred on a much later date i.e. on 29.12.2004. Further, the actual utilization of the donation for the specific purpose up to 31.3.2004 was only ₹ 1,80,07,730/- as against the donated amount of ₹ 5 crore. Thus, the Trust has failed on both the counts i.e. regarding condition laid down in sub clause (iii) as well as laid down in sub clause (iv). Therefore, in the circumstances of the case, I hold that the A.O. was justified in refusing 100% deduction u/s. 80G(2)(d) and in consequence, allowing deduction at 50% u/s. 80G. Accordingly, the A.O. is also justified in further restricting the amount of deduct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion (1) shall be the following, namely:-- xxxxxxxxxxxx xxxxxxxxxx 5(d) any sums paid by the assessee, during the period beginning on the 26th day of January, 2001, and ending on the 30th day of September, 2001, to any trust, institution or fund to which this section applies for providing relief to the victims of earthquake in Gujarat. Xxxxxxxxx Xxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 5(5C) This 8section applies in relation to amounts referred to in clause (d) of sub-section (2) only if the trust or institution or fund is established in India for a charitable purpose and it fulfills the following conditions, namely :- (i) it is approved in terms of clause (vi) of sub-section (5) ; (ii) it maintains separate accounts of income and expenditure for providing relief to the victims of earthquake in Gujarat ; (iii) the donations made to the trust or institution or fund are applied only for providing relief to the earthquake victims of Gujarat 8on or before the 31st day of March, 92004 ; 8(iv) the amount of donation remaining unutilised on the 31st day of March, 2003 is transferred to the Prime Minister's National Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns namely conditions at clause 2, 3 and 4 were also not fulfilled. Then as per initial words used in 80G(5C), deduction u/s. 80G would not be available to the donee trust. No contrary authority is cited before us by the Ld. A.R. We accordingly uphold the order of the Ld. CIT(A). This ground of the assessee is accordingly rejected. 22. Ground No.6 of the assessee relates to the confirmation of action of the A.O. in treating the cost not related to export as indirect cost while computing the deduction u/s. 80-HHC of the Act. 23 Similar issue had come up before us in A.Y. 2000-01 wherein the matter was set aside to the file of the A.O. as under :- "The next ground with regard to the confirmation of non allowance of proper deduction u/s. 80HHC on interest and commission, depreciation, audit fees and co-operative development expenses as indirect cost attributable to the trading goods exported, which has been set aside by the CIT(a), and therefore, no grievance can be raised at this stage and the assessee would be at liberty to advance its claim before the Assessing Officer in the fresh proceedings." 24. In view of the above respectfully following the order of Tribunal we restor ..... X X X X Extracts X X X X X X X X Extracts X X X X
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