2022 (5) TMI 949 - AT - Income Tax

Tribunal Decision: Tax Disallowances Upheld, Additional Depreciation Allowed, Railway Siding Depreciation Remanded

The Tribunal upheld the deletion of disallowances under Sections 80IA(8) and 115JB of the Income-Tax Act, citing consistent favorable precedents. It ... Deduction u/s 80IA(8) - profits derived from the captive power plant/ undertaking - HELD THAT:- As decided in own case [2019 (10) TMI 991 - ITAT DELHI] for assessment year 2013-14 has already been dealt and decided by the co-ordinate Bench of this Tribunal and the same has been confirmed by the jurisdictional Hon'ble High Court [2019 (3) TMI 1886 - DELHI HIGH COURT] - Decided in favour of assessee. MAT computation u/s 115JB - Disallowance of depreciation while calculating book profit under Section 115JB - HELD THAT:- The similar issue has already been dealt and decided by the co-ordinate Bench of this Tribunal for assessment year 2009-10 in the own case find no infirmity in the order of the Id. CIT(A) directing the Assessing Officer to delete the various additions for computation of book profit u/s 115JB - We find the id. CIT(A) while directing the Assessing Officer to delete the various additions/disallowances made by him for computation of book profit u/s 115JB has relied on the decision of Apollo Tyres Ltd [2002 (5) TMI 5 - SUPREME COURT] DR ould not bring any material before us so as to take a contrary view than the view taken by the ld. CIT(A) on this issue. We, therefore, do not find any infirmity in the order of the Id. CIT(A) directing the Assessing Officer to delete the various additions/disallowances for computation of book profit u/s 115JB of the I.T. Act. We, therefore, uphold the order of the Id. CIT(A) on this issue and the grounds raised by the Revenue are dismissed. Additional depreciation on plant and machinery claimed under Section 32(1)(iia) - HELD THAT:- We have perused the assessee’s own case while dealing with the same issue for the assessment years 2006-07 to 2009 held that the amendment which has been brought in by the Finance (No.2) Act, 2012 e.w.f. assessment year 2013-14 whereby the assessee engaged in the business of generation or distribution of power have specifically been included and held eligible for claim of additional depreciation. It has been held by the Co-ordinate Benches of the Tribunal that even prior to the amendment brought in by the Finance Act. 2012, the assessee’s engaged in generation or generation or distribution of electricity were held to be eligible for additional depreciation. It was accordingly held that the assessee is entitled to additional depreciation. It was accordingly held that the assessee is entitled to additional depreciation on the power plant and the windmill installed during the year. In view of the above, we hold that the assessee is entitled to additional depreciation on account of production/generation of power. Rate of depreciation from 10% to 15% in respect of purchase of railway sidings by the assessee during the year under consideration - HELD THAT:- It is not in dispute that the assessee has claimed depreciation at 10% on the railway siding and during the assessment proceedings, claimed depreciation at 15% on the ground that railway sidings were used by the assessee for the purpose of the business ie: transporting raw-material machinery etc. The Assessing Officer has not dealt with the said issue, therefore, in our considered opinion; the said issue deserves to be remanded to the file of the Assessing Officer for fresh consideration by verifying all the records produced by the assessee. Accordingly, we allow the grounds of appeal No. 2 to 2.2 for statistical purposes Issues Involved:1. Deletion of disallowance of Rs. 5,38,95,043/- on account of excess deduction claimed under Section 80IA(8) of the Income-Tax Act, 1961.2. Deletion of addition of Rs. 69,89,846/- on account of disallowance of depreciation while calculating Book Profit under Section 115JB of the Income-Tax Act, 1961.3. Disallowance of Rs. 9,46,866/- on account of additional depreciation under Section 32(1)(iia) of the Income-Tax Act, 1961.4. Non-enhancement of the rate of depreciation from 10% to 15% in respect of purchase of railway sidings.Detailed Analysis:1. Deletion of Disallowance on Account of Excess Deduction Claimed under Section 80IA(8):The Revenue challenged the deletion of the disallowance of Rs. 5,38,95,043/- claimed under Section 80IA(8). The Departmental Representative argued that the CIT(A) erred in deleting the disallowance without considering the facts recorded by the AO. However, the assessee’s counsel contended that this issue was recurring and had been decided in favor of the assessee in previous years by both the Tribunal and the Hon'ble Delhi High Court. The Tribunal noted that similar issues had been resolved in favor of the assessee in past years, including decisions by the Delhi ITAT and the Hon'ble Delhi High Court. Consequently, the Tribunal dismissed Ground No. 1 of the Revenue, upholding the CIT(A)'s order.2. Deletion of Addition on Account of Disallowance of Depreciation while Calculating Book Profit under Section 115JB:The Revenue also contested the deletion of the addition of Rs. 69,89,846/- on account of disallowance of depreciation while calculating Book Profit under Section 115JB. The Departmental Representative supported the AO’s findings, while the assessee’s counsel argued that the issue had been consistently decided in favor of the assessee, citing the Supreme Court judgment in Apollo Tyres and previous Tribunal decisions. The Tribunal, referencing the consistent rulings in favor of the assessee, upheld the CIT(A)'s order and dismissed Ground No. 2 of the Revenue.3. Disallowance of Additional Depreciation under Section 32(1)(iia):The assessee appealed against the disallowance of Rs. 9,46,866/- on account of additional depreciation under Section 32(1)(iia). The CIT(A) had upheld the AO's action, but the assessee argued that similar issues had been decided in their favor in previous years. The Tribunal reviewed past decisions, including those by the Co-ordinate Bench and other Tribunal rulings, which had consistently held that the generation of power qualified as the manufacture of an article or thing, thus entitling the assessee to additional depreciation. The Tribunal allowed the assessee’s grounds of appeal, reversing the disallowance.4. Non-enhancement of Depreciation Rate for Railway Sidings:The assessee also contested the non-enhancement of the depreciation rate from 10% to 15% for railway sidings. The assessee argued that the railway sidings were used for business purposes and should be classified as 'plant and machinery' rather than 'factory building'. The AO had not addressed this issue during the assessment. The Tribunal, acknowledging the omission, remanded the issue back to the AO for fresh consideration and directed the AO to verify the records and pass an appropriate order after providing an opportunity for the assessee to be heard.Conclusion:The Tribunal dismissed the Revenue's appeal (ITA No. 5548/Del/2017) and allowed the assessee's appeal (ITA No. 4941/Del/2017) for statistical purposes, remanding the issue of the depreciation rate for railway sidings back to the AO for further examination. The order was pronounced in the open court on 18th May, 2022.