TMI Blog2016 (2) TMI 1278X X X X Extracts X X X X X X X X Extracts X X X X ..... tion and the assessee had claimed only 50% of the additional depreciation and the balance amount was claimed in the next year. Respectfully following the Tribunal decisions, we direct the Assessing Officer to allow additional depreciation claimed by the assessee. This ground of the assessee is allowed. Disallowance of additional depreciation claimed on assets eligible for 100% deduction - assessee has claimed additional depreciation on the assets entitled for 100% depreciation though used for less than 180 days - HELD THAT:- The legislature is clear where the assets itself is allowed 100% depreciation which have been used for less than for 180 days. The claim for additional depreciation does not satisfy the provisions under Sec. 32(1)(iia). Therefore, we are of the opinion that the Assessing Officer has examined and correctly disallowed and we uphold the findings of the Assessing Officer and dismiss the assessee ground. Disallowance of additional depreciation on the leased assets (windmill) - assessee during the year has acquired windmills and leased out and claimed additional depreciation - HELD THAT:- Prima facie the assessee is in the business of manufacture of commerc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to correct any mistake in calculating of Arms Length Price(ALP) for valuation, and it is evident that the revised form 3CEB includes the proper comparables in respect of vehicles, parts which are integral product of commercial vehicles. DR vehemently argued against filing of revised form 3CEB and limitation period, we consider the apparent facts, provisions of law, evidence and the action of TPO in rejecting the revised form 3CEB is not proper as factual comparables certified by the Chartered Accountant in Revised form 3CEB cannot be ignored and we in the interest of justice, remit the disputed issue to the file of the Assessing Officer and to consider Revised form 3CEB filed by the assessee for assessment and calculation of Arms Length Price. Assessing Officer should provide adequate opportunity of hearing to the assessee and pass the order. We set aside the order of the Assessing Officer and partly allow the grounds of assessee for statistical purpose. Disallowance u/s. 43B relating to units sold as slump sale of the Act - Contention of AR that since there is netting of liability and such discharge of liability is treated as deemed payment u/s 43B - HELD THAT:-Before us the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not pressed the ground and treated as dismissed. Denying of TDS credit - HELD THAT:- We direct the Assessing Officer to allow TDS credit as per form 16A after verification of TDS deducted by the deductor in accordance with law and this ground of the assessee is allowed. - I.T.A. No.2086/Mds/2010 - - - Dated:- 16-2-2016 - Chandra Poojari, Accountant Member And G. Pavan Kumar, Judicial Member Vikram Vijayaraghavan, Adv. for the Appellant. M.M. Bhusari, IRS, CIT for the Respondent. ORDER G. Pavan Kumar, The appeal filed by the assessee is directed against order of the Dispute Resolution Panel (DRP) Chennai in F.No. DRP/Chennai/Sectt/038/2010-11, dated 28.09.2010 passed u/s. 144C(5) r.w.s.144C(8) and assessment order dated 05.10.2010 passed u/s. 143(3) r.w.s. 144C and 250 for the assessment year 2006-2007 of the Income Tax Act, 1961 (herein after referred to as 'the Act'). 2. The assessee has raised various grounds before the Tribunal and dealt on the issue as under. 3. The Brief facts of the case that the assessee is in the business of manufacturing of commercial vehicles, industrial and marine engines spares and castings. For the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aw. The submissions filed by the assessee has been carefully considered and the same cannot be accepted for the following reasons'. and the ld. Assessing Officer made calculations based on opening and closing written down value (WDV) of the assessee and CBDT circular and alleged that additional depreciation can be claimed on new plant and machinery and not on assets of previous year. The DRP confirmed the findings of the Assessing Officer. Considering the nature of assets, provisions of law on additional depreciation, the Assessing Officer has disallowed claim of additional depreciation ₹ 7,24,249/-. Against the order of Assessing Officer the assessee filed an appeal before the Tribunal. 4.2 Before Tribunal, the assessee has raised the grounds that the Assessing Officer is not justified in disallowing additional depreciation u./s.32(1)(iia) of the Act. There is a right to claim additional depreciation for Assets acquired after 31.03.2005. Since the assessee has not claimed full depreciation in the previous year on assets and the balance to be carried forward for allowing in succeeding assessment years and supported his arguments referring to Finance Minister Budg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd interpreted that the provisions does not prohibit or restrict the claim of additional depreciation were assets put to use for less than 180 days but on assets eligible for 100% depreciation and were entire cost of the assets is allowed as deduction and no additional depreciation shall be allowed. The DRP also confirmed the findings of the Assessing Officer. Aggrieved, the assessee preferred an appeal before Tribunal. 5.2 Before us, the ld. Authorised Representative reiterated his submissions made before the Assessing Officer and DRP. The arguments of the assessee though the assets are allowed 100% depreciation additional depreciation to be allowed. The ld. Authorised Representative drew attention to the provisions of law and were asset is used for less than 180 days, depreciation is allowed in previous year and relied on judicial decisions. 5.3 Contra, the ld. Departmental Representative relied on the orders of the lower authorities and DRP and objected to the submissions. 5.4 We heard the rival submissions and perused the material on record and judicial decisions cited by the ld. Authorised Representative. The legislature is clear where the assets itself is allowed 100 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee preferred an appeal before Tribunal. 6.2 Before the Tribunal, the assessee has reiterated his submissions on the claim of additional depreciation on leased assets windmills made before the Assessing Officer and also DRP. On perusal of the Sec. 32(1)(iia) in the case of any new machinery or plant (other than ships and aircraft) which has been acquired and installed after the 31st day of March, 2005 by an assessee engaged in the business of manufacture or production of any article or things (or in the business of generation or generation and distribution of power) a further sum equal to twenty percent of the actual cost of such machinery or plant shall be allowed as deduction. The assessee is in the manufacturer of vehicles and also engines and eligible for additional depreciation and supported his arguments with the decisions of VTM Ltd (supra) and further as held in the case of First Leasing Co of India Ltd. (supra) where the assets are eligible for initial depreciation and investment allowance in the business of leasing. The ld. Authorised Representative vehemently argued that the definition of business of manufacture or production of any article or things, the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion was allowed at 10% in assessee's own case in earlier year and the appeal was filed by the Revenue for the assessment year 1998-99 before the Tribunal and depreciation was restricted to 5% in assessee's own case for assessment year 2002-03. 7.3 Contra, the ld. Departmental Representative relied on the lower authorities orders and contested the grounds of the assessee. 7.4 We heard the rival submissions and perused the material on record and judicial decisions cited by the ld. Authorised Representative. The assessee has claimed excess depreciation on residential building. As per the Income Tax Rules the depreciation on building shall be allowed at 5% instead of 10% claimed by the assessee. The contention of the assessee that Commissioner of Income Tax (Appeals) in earlier assessment year has allowed higher depreciation cannot be accepted and on reference to the provisions of the Acts buildings used for residential purpose depreciation allowed @ 5% as per Income Tax Rules. Hence, we uphold the order of the Assessing Officer and dismiss the ground of the assessee. 8. The fifth ground raised by the assessee with regard to disallowance u/s.14A r.w.r. 8D of the Act &# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uished the decisions relied by the assessee and also not taken the cognisance of the appeals are pending in Courts and erred in making disallowance and therefore prayed for deletion. 8.3 On the other hand, the ld. Departmental Representative relied on the orders of the lower authorities and argued that the similar issues in dispute are pending before High Courts and Supreme Court. 8.4 We heard the rival submissions and perused the material on record and judicial decisions cited. The ld. Authorised Representative submitted that the assessee is in receipt of exempted income and no expenditure has been incurred for earning income. In assessee's own case the Co-ordinate Bench of Tribunal has considered 2% disallowance of exempted income u/s.14A of the Act. The action of the Assessing Officer applying Rule 8D is not correct as the provisions of Rule 8D are introduced effective from 24.03.2008 and applicable from the assessment year 2008-09 and we rely on the decision of Jurisdictional High Court in the case of Simpson Co. Ltd. v. Dy. CIT [Tax Case (Appeal) No.2621 of 2006, dated 15.10.2012] and direct the Assessing Officer to disallow 2% of exempt income as disallowance u/s. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c. 139(5). The TPO has failed to appreciate that the term transaction is defined in Rule 10A - Transaction includes a number of closely linked transactions. The transactions the assessee has entered with associated enterprise are supply of chests, fully built vehicles and spare parts. These three transactions with AE have resulted in a profit. The basis for pricing of products to AE and non-AE has many commercial considerations apart from the adjustments made to the comparables such as long standing relationship, payment terms, credit risk, marketing function performed etc. and that as a matter of business prudence the company may lose in some transaction but overall transactions ended in a profit situation and hence comparison in price variation on every single invoice has no meaning. To bring clarity to the business process in fixation of pricing to Lanka Ashok Leyland Limited, we put forward the following points: All production planning and price fixation happens not on every invoice basis, but on the basis of annual order quantity and off take model-wise. There is always a lead-lag between input cost increases and pricing to the customer, which vary the profitab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order. The ld. Authorised Representative made submission on rejection of revised form 3CEB and drew attention to provisions of Sec. 92CA(3) of the Act as under:- ''On the date specified in the notice under sub-section (2) or as soon thereafter as may be, after hearing such evidence as the assessee may produce, including any information or documents referred to in sub-section (3) of section 92D and after considering such evidence as the TPO may required on any specified points and after taking into account all relevant materials which he has gathered, the TPO shall, by order in writing, determining the arm's length price in relation to the international transaction (or specified domestic transaction) in accordance with sub-section (3) of section 92C and send a copy of his order to the Assessing Officer and to the assessee On perusal of provisions, there is no time limit specified for filing revised Form 3CEB as alleged by the TPO. The TPO rejected form 3CEB with correct observations and the circumstances of filing revised form and relied only on original form 3CEB ignoring Revised form 3CEB containing proper comparables and the corrections in (a) change in compar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... includes the proper comparables in respect of vehicles, parts which are integral product of commercial vehicles. Though ld. Departmental Representative vehemently argued against filing of revised form 3CEB and limitation period, we consider the apparent facts, provisions of law, evidence and the action of TPO in rejecting the revised form 3CEB is not proper as factual comparables certified by the Chartered Accountant in Revised form 3CEB cannot be ignored and we in the interest of justice, remit the disputed issue to the file of the Assessing Officer and to consider Revised form 3CEB filed by the assessee for assessment and calculation of Arms Length Price. Further the ld. Assessing Officer should provide adequate opportunity of hearing to the assessee and pass the order. We set aside the order of the Assessing Officer and partly allow the grounds of assessee for statistical purpose. 11. The eighth ground raised by the assessee with regard to disallowance of claim made by the assessee u/s. 43B ₹ 11,64,106/- relating to units sold as slump sale of the Act. 11.1 The assessee sold unit ''Ductron Castings'' u/s.50B of the Act and offered long term capital ga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee and Assessing Officer has rightly disallowed the claim. 11.4 We heard the rival submissions, perused the material on record and submission of the ld. Authorised Representative. The units sold is a slump sale and any gains on slump sale takes the characteristic of long term capital gains and not income from business. In the slump sale the liabilities are netted or set off against sale consideration. The claim u/sec. 43B in respect of statutory payments outstanding which were disallowed in the hand of the assessee in earlier assessment years are carried forwarded. The contention of the Authorised Representative that since there is netting of liability and such discharge of liability is treated as deemed payment u/s 43B of the Act. Before us the assessee has not produced any evidence to show that such payments are made to the concerned Government Departments and also there is no liability in the books of account of the assessee. Considering the circumstances, we are of the opinion if assessee company makes the payment of statutory dues and produced challans, proof of payments, deduction shall be allowed. Therefore, we remit the issue to the file of the Assessing Of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e ld. Assessing Officer found that the assessee has not made additions u/s.40(a)(ib) of the Act in computation of income. The assessee has reduced the securities transaction tax component from sale value and the balance was considered in the books of account. The sale of investments has been considered under Capital gains and was accepted. The ld. Assessing Officer on the ground that profit on sale of securities is exempted u/s. 10(38) of the Act and assessee has debited the expenditure of STT to Profit and Loss account and claimed deduction and not added in computation of income statement. Hence disallowed and the DRP also confirmed the addition. Aggrieved by the order of the Assessing Officer, the assessee filed an appeal before Tribunal. 13.2 Before the Tribunal, the ld. Authorised Representative submitted that the Securities Transaction Tax was adjusted against the sale price and no disallowance is warranted. Further, the assessee has not claimed Securities Transaction Tax as a business expenditure and no addition be made. The income on sale of securities is as exempted u/s.10(38) of the Act and considered to tax under income from capital gains. Therefore the action of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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