TMI Blog2018 (10) TMI 2000X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment year - HELD THAT:- It is not disputed that the claim of the assessee was on the balance of the additional depreciation remaining after what was availed on assets acquired during the preceding assessment year. As relying on Brakes India Ltd [ 2017 (4) TMI 511 - MADRAS HIGH COURT] we direct the AO to allow the claim of the balance additional depreciation. Additional depreciation on an air circulator - Claim disallowed by the lower authorities considering it to be electrical installation - HELD THAT:- There is nothing on record to show that electrical installation on which additional depreciation was claimed by the assessee was an air circulator which could be construed as plant and machinery. Accordingly, we are of the opinion that lower authorities were justified in denying the claim of additional depreciation on the said item. We do not find any reason to interfere with the orders of the lower authorities. Proportionate disallowance on the deduction claimed by the assessee u/s.10B - AO charged a part of the R D expenditure to the units on which assessee was claiming deduction u/s.10B - claim of the assessee was that R D unit was a separate one and its expen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w taken by the ld. Assessing Officer that amounts spent on in- house R D was allowable only as per DSIR approval. Contention of the ld. Authorised Representative was that assessee had on 03rd May, 2012 addressed a letter to DSIR seeking enhancement of R D expenditure and this was still to get a response. In any case, as per the ld. Authorised Representative this Tribunal in assessee s own case for assessment year 2009-2010 in ITA No. 317/Mds/2014 had allowed a similar claim. 4. Per contra, ld. Departmental Representative strongly supported the orders of the lower authorities. 5. We have considered the rival contentions and perused the orders of the authorities below. Claim u/s.35(2AB) of the Act was admittedly curtailed since DSIR had approved only a sum of Rs. 10,11,02,517/- against which actual revenue R D expenditure incurred by the assessee came to Rs. 10,67,69,153/-. We find that there was a similar claim exceeding the amount approved by DSIR for assessment year 2009-2010 also. When the matter reached this Tribunal, it was held as under at paras 14 14.1 of its order dated 03.5.2017 in ITA No.317/Mds/2014: 14.0 Ground No.3 in assessee s appeal for the A.Y 2009 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot pressed. 8. Vide its ground No.3, grievance raised by the assessee is on non adjudication of an issue relating to computation of deduction made u/s.10B of the Act with regard to interpretation of the term total turnover . 9. Ld. Counsel for the assessee did not address any argument on the ground before us. The said ground does not find a place in the chart of issues submitted by the ld. Authorised Representative, also. Accordingly, ground No.3 is dismissed as not argued. 10. Vide its ground No.4, grievance raised by the assessee is on disallowance of carry forward additional depreciation of Rs. 1,02,18,216/- in respect of assets acquired in the preceding assessment year. 11. Ld. Counsel for the assessee submitted that the claim was on additional depreciation for plant and machinery acquired during the previous year relevant to assessment year 2009-2010. According to the ld. Authorised Representative, 50% of the additional depreciation alone was allowed in the said year and assessee was therefore eligible for claiming the balance 50% of the additional depreciation in the impugned assessment year. Reliance was placed on the judgment of Hon ble Jurisdictional High Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a High Court. 7. In so far as the first submission advanced by Mr.Ravi is concerned, according to us, the same is completely untenable. 7. 1. The judgment of the Division Bench of this Court in M.M.Forgings Limited Vs. Additional Commissioner of Income Tax, did not deal the issue, which is at hand. 7. 2.The issue, in hand, is as to whether balance additional depreciation could be carried forward to the year, following the previous year, in which, additional depreciation was claimed. 7. 3.The Division Bench in M.M.Forgings case the said case was not concerned with the issue, with which, we are faced, that is, the right to carry forward the balance additional depreciation. Therefore, the judgment is completely distinguishable. 8. The second submission of Mr.Ravi, that Circular no.8 of 2002 dated 27.08.2002 and Circular no.281 dated 29.11.1979, have not been taken note of, in our judgment rendered in Commissioner of Income Tax, Madurai Vs. M/s.Shri T.P.Textiles Private Limited, according to us, will not impact, either the reasoning or the conclusion reached by us, in the said matter. 8. 1. It is pertinent to note that the Circular no.281 dated 29.11.1979, pre-dates t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee stands dismissed. 18. Now, we take up appeal of the Revenue. 19. Revenue has taken altogether five grounds of which grounds 1 5 are general, needing no specific adjudication. 20. Vide its ground No.2, Revenue is aggrieved that ld. Commissioner of Income Tax (Appeals) deleted proportionate disallowance made by the ld. Assessing Officer on the deduction claimed by the assessee u/s.10B of the Act. 21. Ld. Departmental Representative submitted that ld. Commissioner of Income Tax (Appeals) had relied on the judgment of Hon ble Karnataka High Court in the case of CIT vs. Yogakawa India Ltd, 341 ITR 385 while allowing the claim. However, as per the ld. Departmental Representative, R D expenditure, considered by the ld. Assessing Officer for set-off, was not relatable to any separate independent unit. Therefore, as per the ld. Departmental Representative, ld. Assessing Officer was justified in charging part of such R D expenses to the income of unit on which deduction u/s.10B of the Act was claimed. 22. Per contra, ld. Authorised Representative strongly supported the order of the ld. Commissioner of Income Tax (Appeals). 23. We have considered the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of Civil Appeal Nos. 8563/2013, 8564/2013 and civil appeal arising out of SLP(C) No. 18157/2015, which have been filed by loss making eligible units and/or by noneligible assessees seeking the benefit of adjustment of losses against profits made by eligible units. 15. Sub-section 4 of Section 10A which provides for pro rata exemption, necessarily involving deduction of the profits arising out of domestic sales, is one instance of deduction provided by the amendment. Profits of an eligible unit pertaining to domestic sales would have to enter into the computation under the head profits and gains from business in Chapter IV and denied the benefit of deduction. The provisions of Sub-section 6 of Section 10A, as amended by the Finance Act of 2003, granting the benefit of adjustment of losses and unabsorbed depreciation etc. commencing from the year 2001-02 on completion of the period of tax holiday also virtually works as a deduction which has to be worked out at a future point of time, namely, after the expiry of period of tax holiday. The absence of any reference to deduction under Section 10A in Chapter VI of the Act can be understand by acknowledging that any such re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the provisions for set off and carry forward contained in Sections 70, 72and 74 of the Act would be premature for application. The deductions under Section 10A therefore would be prior to the commencement of the exercise to be undertaken under Chapter VI of the Act for arriving at the total income of the assessee from the gross total income. The somewhat discordant use of the expression total income of the assessee in Section 10A has already been dealt with earlier and in the overall scenario unfolded by the provisions of Section 10A the aforesaid discord can be reconciled by understanding the expression total income of the assessee in Section 10A as total income of the undertaking . 18. For the aforesaid reasons we answer the appeals and the questions arising therein, as formulated at the outset of this order, by holding that though Section 10A, as amended, is a provision for deduction, the stage of deduction would be while computing the gross total income of the eligible undertaking under Chapter IV of the Act and not at the stage of computation of the total income under Chapter VI. All the appeals shall stand disposed of accordingly . Considering the judgment of Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble Apex Court in the case of GE Technological Centre Pvt. Ltd. v. CIT 327 ITR 456. The findings and conclusions arrived in earlier ground in respect of payment made to M/s.Biggleswade Ltd., are squarely applicable to this ground also. Therefore, we do not find any infirmity in the order of the Ld.CIT(A) and the same is upheld. The Revenue s appeal on this issue for the A.Ys 2007-08, 2008-09 and A.Y 2009-10 are dismissed . There is no dispute that the payments made by the assessee during the relevant previous year was also based on the same agreement considered by the Tribunal in the appeals for the assessment years 2007-08 to 2009-2010. Following the above decisions, we hold that ld. Commissioner of Income Tax (Appeals) was justified in deleting the disallowance made u/s.40(a)(i) of the Act. Ground No.3 of the Revenue stands dismissed. 28. Vide its ground No.4, grievance of the Revenue is on the direction of ld. Commissioner of Income Tax (Appeals) to allow depreciation at the rate of 60% on UPS. 29. Ld. Counsel for the assessee submitted that the issue was covered in favour of the assessee, through an order dated 03.05.2017 in in ITA Nos.351/Mds/13, 204 205/Mds/2014 f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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