TaxTMI 
TaxTMI 
2011 (2) TMI 640
X X X X Extracts X X X X
X X X X Extracts X X X X
.... depreciation being additional depreciation claimed by the appellant. 2. The Ld. CIT Appeals also erred in law and on facts in confirming the disallowance of Rs.7,62,565/- out of interest expenses." 2. We have heard the learned representatives of both the parties, perused the findings of the authorities below and considered the material available on record. 3. The facts on ground No.1 of the appeal are that the assessee purchased new plant and machineries amounting to Rs.1,77,92,784/- and has claimed normal depreciation @ 25% and further additional depreciation @ 15% has been claimed as per section 32 (1) (iia) of the IT Act totaling to Rs.49,13,407/-. The Chartered Accountant certified that the same depreciation is allowable. The AO not....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tion of the assessee and material on record confirm the addition. His findings at pages 5 to 8 of the appellate order are reproduced as under: "Keeping in view the aforesaid facts and circumstances, first of all it is very essential to consider the pre-requisite for claiming depreciation which are as under: In order to avail depreciation, the following conditions must be fulfilled: (a) Asset must be owned by the assessee; (b) It must be used for the purpose of business or profession; and (c) It should be used during the relevant accounting year. First of all asset must be owned by the assessee - In order to be entitled to depreciation allowance, the assessee has to show that the asset is owned by him or assessee is the co-owne....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ng on or after the 1st day of April, 2002 or (B) any industrial undertaking existing before 1st day of April 2002 during any previous year in which it achieves the substantial expansion by way of increase in installed capacity by not less than ten percent: Provided further that no deduction shall be allowed in respect of - (a) any machinery or plant which, before its instillation by the assessee, was used either within or outside India by any other person; or (b) any machinery or plant installed in any office premises or any residential accommodation, including accommodation In the nature of a guest house; or (c) any office appliances or road transport vehicles; or (d) any machinery or plant, the whole of the actual cost ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ter, thereby, the purchase of the stenter does not add installed capacity at all. It is also a fact that the director's report clearly states that the installed capacity of the current and the previous year are 'not ascertainable'. Consequently, the installed capacity of the intrinsic machines has not changed. In the given facts and circumstances, the additional depreciation cannot be allowed. With the result, the action of the Assessing Officer is confirmed on these grounds (i.e. Grounds NO.2 & 3)." 4. The learned Counsel for the assessee reiterated the same submission made before the authorities below and submitted that even if the Directors' Report made a wrong statement, the report of the Chartered Accountant should have been accepted.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....has not been enhanced even if some plant and machineries were purchased. The Directors' Report is virtually an admission of the fact which can not be contradicted by the report of the Chartered Accountant. The AO even on merit noted that even in case of increase in out-put is not co-terminus with an increase in the installed capacity. Such findings of the AO have not been rebutted through any material on record. The Directors of the assessee Company are responsible for the affairs of the assessee Company and once they have admitted that the installed capacity of the current and previous year is not ascertainable, would show that installed capacity has not been enhanced. In the absence of any evidence on record, we do not find it to be a fit....
X X X X Extracts X X X X
X X X X Extracts X X X X
....-05-2010 is filed on record. The learned DR did not dispute the above fact. 9. On consideration of the above fact, we are of the view that the learned CIT(A) was not justified in confirming the addition. In assessment year 2002-03 the Tribunal vide order dated 07-05-2010 held as under: "13. On consideration of the rival submissions we are of the view that the learned CIT(A) was not justified in making proportionate disallowance of the interest. It is admitted fact that no investment has been made in the shares of group companies in the assessment year under appeal. The AO has also not brought any evidence on record if there was any nexus between the borrowed funds and the amount invested in the shares of other companies. On identical fact....