Court Upheld Deletion of Disallowance & Depreciation Claims Under Income Tax Act
The Pr. Commissioner of Income Tax -6 Versus Neel Metal Products Ltd.
The Pr. Commissioner of Income Tax -6 Versus Neel Metal Products Ltd. - TMI
Issues:1. Deletion of disallowance under Section 14A of the Income Tax Act.
2. Depreciation claimed at 15% per annum on certain items.
3. Disallowance of depreciation on the canteen building.
Analysis:Issue 1:The first issue pertains to the deletion of the disallowance of Rs. 1,39,58,000 made under Section 14A of the Income Tax Act. The respondent-assessee did not earn any dividend or exempt income in the relevant year. The court referred to previous decisions to support the deletion, citing cases such as Commissioner of Income Tax-IV Vs. Holcim India Private Limited and Cheminvest Limited Vs. Commissioner of Income Tax-VI. The court upheld the decision based on these precedents, indicating that the issue was covered against the Revenue.
Issue 2:The second and third issues raised by the Revenue relate to depreciation claimed by the respondent-assessee at 15% per annum on specific items categorized as plant and machinery. The Assessing Officer and the first appellate authority had determined that the items should be depreciated at 10% as they fell under the definition of 'electrical fittings' as per the Income-tax Rules, 1962. The court examined the list of items and noted that some could be classified as 'electrical fittings' while others may not. Despite a disallowance made by the Assessing Officer, the court deemed the amount insignificant and chose not to address the question of the rate of depreciation further.
Issue 3:The third ground raised by the Revenue concerns the disallowance of depreciation on the canteen building amounting to Rs. 5,83,812. The disallowance was based on the timing of the final bill submission by the canteen contractor, which occurred after the financial year had ended. However, the Commissioner of Income Tax (Appeals) and the Tribunal found that the canteen had been operationalized before the end of the Assessment Year, as evidenced by bills from the canteen contractor related to the earlier period. The Tribunal upheld this factual finding, concluding that there was no basis to interfere with it.
In conclusion, the court dismissed the appeal filed by the Revenue without any order as to costs, addressing all the issues raised in the case comprehensively.