TaxTMI 
TaxTMI 
2012 (12) TMI 87
X X X X Extracts X X X X
X X X X Extracts X X X X
....(c) of the was imposed by the AO are as follows: The assessee is a company which is engaged in the business of manufacturing of concrete railway sleepers. During the year the assessee has claimed total depreciation as per IT Act at Rs.95,85,169/-. This includes depreciation @ 40% amounting to Rs.56,48,700/- in respect of moulds capitalised for Surendranagar Unit. The AO called upon the Assessee to justify its claim and explain as to why the depreciation on moulds should not be restricted to 25% allowable for machinery. In response thereto, the Assessee vide letter dated 30-10-06 submitted that in Rule 5(2) of the Rules it was entitled to claim accelerated depreciation at 40%. The provisions of Rule 5(2) are as under: "Where any new machin....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nbsp; The Assessee did not enclose along with the return of income certificate in proof of claim for depreciation at the accelerated rate under Rule 5(2) and submitted that the same has not been received and the same shall be filed as and when received. However, no such certificate was furnished before the AO. 3. The AO held that under Rule 5(2) of the IT Rules furnishing of a certificate from the competent authority in respect of pant & machinery, (in this case moulds) to qualify for depreciation @ 40% was necessary and since the assessee was unable to furnish & comply with the said requirement ,the depreciation on such assets is restricted to 25% only. The disallowance of depreciation as made by the AO was accepted by the Assessee and n....
X X X X Extracts X X X X
X X X X Extracts X X X X
....from the date of issue. It was submitted that this period of validity mentioned is insignificant considering the fact that the Assessee in fact satisfies the requirement of Rule 5(2) of the Rules. It was submitted that in substance the requirement of Rule 5(2) have been duly complied by the assessee and there was no case for disallowance of depreciation. It was submitted that in penalty proceedings the bonafided of the assessee have to be seen and in the light of the facts as explained above no penalty ought to have been imposed. 5. The CIT(A) allowed the assessee's appeal in part for the following reasons. "I have considered the facts of the issue as well as written submissions filed by the AR. There is no merit in the submissions of the....