1998 (5) TMI 54 - AT - Income Tax

ITAT Decision: Revenue Appeal Dismissed, Various Allowances Upheld, Depreciation Confirmed

ASSISTANT COMMISSIONER OF INCOME TAX. Versus INVESTMENT TRUST OF INDIA LTD.

The ITAT dismissed the Revenue's appeal on the allowance of investment claim, upheld the deletion of disallowed expenses for statutory insertions, ... - Issues:1. Allowance of investment claim2. Disallowance of expenses for statutory insertions3. 100% depreciation on leased bottles4. Disallowance of expenditure on repossessed vehicles5. Non-allowance of additional depreciation on computer and paper-copier6. Charging of interest under section 2167. Disallowance of 100% cost of leased carpetsIssue 1: Allowance of investment claimThe ITAT dismissed the Revenue's appeal regarding the allowance of the assessee's claim for investment allowance, citing the decision of the Hon'ble Supreme Court in a specific case.Issue 2: Disallowance of expenses for statutory insertionsThe ITAT upheld the CIT(A)'s decision to delete the disallowance of expenses incurred for statutory insertions, emphasizing that such insertions for inviting public deposits are not akin to advertising and publicity. Therefore, the provision of s. 37(3A) was deemed inapplicable, and the ground of appeal was dismissed.Issue 3: 100% depreciation on leased bottlesThe ITAT confirmed the CIT(A)'s decision to allow 100% depreciation on leased bottles, considering bottles as plants under the relevant provisions of the Act. The ITAT upheld the first appellate authority's ruling based on the definition of plant and machinery, dismissing the ground of appeal.Issue 4: Disallowance of expenses for repossessed vehiclesThe ITAT dismissed the appeal against the disallowance of expenditure on repossessed vehicles under s. 37(3A), maintaining that the section restricts the allowable expenditure for an assessee. The ITAT agreed with the Departmental Representative, rejecting the new plea raised by the assessee's representative, and confirmed the disallowance made by the AO.Issue 5: Non-allowance of additional depreciation on computer and paper-copierThe ITAT allowed the assessee's claim for additional depreciation on computer and paper-copier, as the CIT(A) had determined that the computer was not an office appliance. The ITAT directed the AO to allow the additional depreciation claimed by the assessee, following relevant legal precedents and holding that the disallowance was based on presumption rather than factual findings.Issue 6: Charging of interest under section 216The ITAT set aside the AO's order regarding the charging of interest under s. 216, emphasizing the necessity for a speaking order and a fair opportunity for the assessee before imposing such interest. The matter was remanded back to the AO for a fresh decision in accordance with the law.Issue 7: Disallowance of 100% cost of leased carpetsThe ITAT partially allowed the appeal concerning the disallowance of 100% depreciation on leased carpets. The ITAT directed the AO to reexamine the issue of carpet cost, emphasizing the need for verification and identification of individual carpet costs for determining the depreciation allowance.