Tribunal upholds additional depreciation on wind mill, reduces disallowance for share investments.

The Tribunal dismissed the revenue's appeal regarding additional depreciation on the wind mill, upholding the allowance of additional depreciation under section 32(1)(iia) as the wind mill indirectly contributed to the manufacturing business. The Tribunal partially allowed the assessee's cross objection against disallowance under section 14A, reducing the disallowance amount due to the absence of interest-bearing borrowed funds for share investments and specific circumstances of the case.

---

---

Issues involved: Appeal by revenue against deletion of additional depreciation on wind mill and cross objection by assessee against disallowance under section 14A of the Income Tax Act, 1961.

Appeal by Revenue - Additional Depreciation on Wind Mill:
The revenue appealed against the deletion of additional depreciation on a wind mill, arguing that it had no connection with the core manufacturing activity. The CIT(A) allowed the additional depreciation under section 32(1)(iia) as the wind mill indirectly contributed to the manufacturing business by generating electricity. The CIT(A) cited the Finance Act of 2005 which removed the condition of substantial expansion for claiming additional depreciation. The Tribunal upheld the CIT(A)'s decision, stating that the conditions for additional depreciation were met, and rejected the revenue's appeal.

Cross Objection by Assessee - Disallowance under Section 14A:
The assessee objected to the disallowance of a certain amount under section 14A of the Income Tax Act, 1961. The AR argued that no interest-bearing borrowed funds were used for share investments, and the disallowance was unjust. The AO applied Rule 8D for disallowance, but the Tribunal noted that Rule 8D was not applicable for the relevant assessment year. The Tribunal also considered a Special Bench decision overruled by the Bombay High Court. Ultimately, the Tribunal partially allowed the assessee's objection, reducing the disallowance amount based on the absence of interest-bearing borrowed funds and the specific circumstances of the case.

In conclusion, the Tribunal dismissed the revenue's appeal regarding additional depreciation on the wind mill and partially allowed the assessee's cross objection against disallowance under section 14A of the Income Tax Act, 1961.

---