Tribunal decision: Disallowance under section 14A limited, depreciation rate at 30%.

The appeal filed by the assessee was partly allowed regarding the disallowance under section 14A, with the Tribunal directing the Assessing Officer to restrict the disallowance to Rs. 50,000. The appeal filed by the Revenue concerning the rate of depreciation on moulds was dismissed, upholding the CIT(A)'s decision to allow depreciation at 30%. The Tribunal maintained these decisions on both issues in its order pronounced on 5.12.2016.

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Issues:
1. Disallowance under section 14A of the Act - Rule 8D computation.
2. Rate of depreciation on moulds - 30% or 15%.

Analysis:

Issue 1: Disallowance under section 14A of the Act - Rule 8D computation:
The case involved the disallowance made by the Assessing Officer under section 14A of the Act, related to dividend income claimed as exempt under section 10(34) of the Act. The Assessing Officer computed the disallowance under Rule 8D(2)(iii) of the I.T. Rules, which was confirmed by the CIT(A). The assessee contended that investments were made in subsidiary companies for business expediency, and a portion of the staff's salary was disallowed under section 14A. The Tribunal noted that no movement in equity shares investments occurred during the year, and other investments were in mutual funds. It was observed that a portion of other administrative expenses should be allocated towards investment activities. The Tribunal set aside the CIT(A)'s order and directed the Assessing Officer to restrict the disallowance to Rs. 50,000, considering the investment portfolio's nature and activities.

Issue 2: Rate of depreciation on moulds - 30% or 15%:
The second issue revolved around the rate of depreciation on moulds held by the assessee, with the CIT(A) allowing a higher rate of 30% based on a decision by the Coordinate Bench in the assessee's own case for A.Y. 2006-07. The Tribunal upheld the CIT(A)'s decision, citing consistency with previous orders and the absence of new facts justifying a different stand. The Tribunal found no reason to interfere with the CIT(A)'s order on this issue, thereby allowing the assessee's claim for depreciation at 30% on moulds.

In conclusion, the appeal filed by the assessee was partly allowed regarding the disallowance under section 14A, while the appeal filed by the Revenue was dismissed concerning the rate of depreciation on moulds. The Tribunal pronounced the order on 5.12.2016, maintaining the decisions on both issues.

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