TaxTMI 
TaxTMI 
TaxTMI 
2014 (9) TMI 279
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....rk, consisting of Mortar, Cement and Bricks, and therefore qualifies for depreciation at the rate of 10%." 2.1 Facts of the case, in brief, are that the Assessing Officer during the course of assessment proceedings noted that the assessee has claimed depreciation @80% on the windmills installed by it at village Ranjangaon (Brahmanvel), Taluk Shirur, Dist.Dhule in Maharshtra). The Assessing Officer asked the assessee to justify the claim of depreciation at 80% on the windmills purchased by it. Rejecting the various explanations given by the assessee the Assessing Officer allowed depreciation @10% as against 80% claimed by the assessee and made a disallowance of Rs. 16,81,042/-. 3. In appeal the Ld.CIT(A) following various decisions directed the Assessing Officer to re-compute the depreciation in the following manner : "54. The appellant has provided the costs of various components which have been included by it in the cost of windmill as detailed below: Srl. No. Particulars Amount (Rs.) Amount (Rs.) 1 Cost of wind turbine generator 4,14,00,000/- 2 a) Cost of component-Suzlon Blades 65,00,000/- 3 b) Electrical items - HT Electrical Yard with VCB, CT/PT, HT Transmission lin....
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....ant has claimed an amount of Rs. 37,50,000/- towards power evacuation facility and creation of infrastructure which is included in the cost of WTGS by the appellant. The breakup of power evacuation cost and infrastructure creation cost is not given. Since the infrastructure creation cost would include the cost of making of roads providing free access and keeping the surrounding area vacant, the same would be treated as a building and hence, depreciation @ 10% would be applicable. Since nothing has been provided by the appellant, it would only be fair to assume that 60% of this cost is incurred towards these expenses and 40% towards power evacuation facility. Therefore, depreciation allowable on civil construction will only be Rs. 22,50,000/-. The Assessing Officer is directed to recompute the depreciation accordingly in respect of the new windmill. 57. The appellant has not given a breakup of the component where the cost of consideration for providing easy and free access and keeping the area vacant surrounding land at Gat No. 21/4 village Ranjangaon Windmill Project at Bramhanvel, paid to Sarjan Realities Ltd. has been parked. It is certain that separate bill has been raised for ....
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....iscussed by the Ld CIT(A), the functional test is fulfilled. There should not be quarrel that civil work is involved in the erection of the foundation, but every civil work cannot be treated as civil work as required for bringing construction. In our opinion, cost on the foundation of the wind mill is eligible for the depreciation at the rate 180% or the rate which is applicable to the wind mill as it is integral part of cost of wind mill erection. Same way, the cost for commission and erection cannot be said to be separate from the wind mill as it is directly related to the functioning of wind mill. The Ld CIT(A) has rightly allowed the depreciation on the pro rata basis on the cost of foundation to the extent of the civil work. We may refer to here the decision of the ITAT Ahmedabad Bench in the case of ACIT Vs. Parry Engineering & Electronics, ITA No. 3317/Ahd/2011 dated 2nd March 2012, in which it is held that the foundation is a part of the turbine and is eligible for the rate of depreciation which is applicable to the wind mill. We find no reason to interfere with the order of the CIT(A) on this issue. Accordingly, the same is confirmed." 4.1 Referring to the above, he subm....
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....assessee has claimed expenditure of Rs. 57,82,634/- on account of "Directors commission". The Assessing Officer asked the assessee to furnish the details of this expenditure and asked the assessee to establish the basis for this claim. It was explained that the commission has been paid to the directors on the basis of a resolution passed at the EGM (Extraordinary General Meeting) of the members of the company. A copy of the same was also filed before the Assessing Officer. However, the Assessing Officer was not satisfied with the explanation given by the assessee. He noted that apart from this resolution passed by the Directors of the company, there is no other evidence regarding the necessity of the payment. There is no such justification for such huge payment to the directors in the current year due to the following reasons : i. This payment is for the first time. ii. There is no change in the turnover or profitability of the company as compared to earlier year operations. iii. Directors have not rendered any new services which they have not been rendering in the past years since the company came into existence. iv. There is no basis for payment except the turnover made by t....
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....before the Hon'ble Bombay High Court in the case of CIT Vs. Dempo & Co. Pvt. Ltd. (2011) 196 Taxman 193 was whether a subsidiary company is related person within the meaning of the provisions of section 40A(2)(b) (ii). It was held that the object of section 40A(2) is to prevent diversion of income. Section 40A(2) was added to the Income-tax Act by way of an amendment made by the Finance Act 1968. It is only when payment is made by the assessee to the related person mentioned in clause (b) of section 40A(2) that the assessing officer gets jurisdiction to disallow the expenditure or a part of expenditure which is considered to be excessive or unreasonable. Since the subsidiary company was not a member of the holding company, Dempo & Co. Pvt. Ltd., the provisions of clause (d) of section 40A(2)(b) were not attracted. Thus the Hon'ble Court did not decide on the issue at hand, i.e., whether the provisions of section 40A(2)(b) will be attracted when both the payer and the payee fall in the same tax bracket. 72. In the case of CIT & Anr.v. Glaxo Smithkline Asia (P) Ltd. (2010) 236 CTR 113 (SC), the Hon'ble Supreme Court declined to interfere with the concurrent findings of the authority....
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....e not attracted when both payer and payee fall in the same tax bracket. 8.1 It is the case of the Revenue that the Directors have not shown receipt of said commission through their respective returns for A.Y. 2008-09. Further, it is also the case of the Revenue that there is no evidence as to the nature of services rendered by the Directors justifying such huge commission payment. It is the case of the assessee that the Directors have rendered services and the commission has been paid on the basis of resolution passed at the EGM. It is also the submission of the Ld. Counsel for the assessee that the Assessee as well as the Directors fall under the same tax rate and there is no attempt to evade tax. From the copies of the assessment orders passed u/s.143(3)/263 on 19-12-2012 in case of Shri P.J. Jadhav and on 24-09-2013 in case of the other directors we find the Assessing Officer has brought to tax such commission income in the hands of the respective directors which were not declared earlier by them. Further, the company as well as the directors fall in the same tax slab. Therefore, the Ld.CIT(A), in our opinion, is justified in deleting the addition which is in consonance with th....
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.... Ltd. and paid by the appellant is for compensating the increase in raw material prices and that too after Cummins India Ltd. had approved of the same. Hence, the appellant has sufficiently proved that payment to M/s Saroj Castings Pvt. Ltd. had incurred during the course of commercial dealings and hence, it is not covered by the provisions of section 40A(2)(b) of the Act. 77. In view of the above discussion I hold that the Assessing Officer was not justified in making the disallowance under section 40A(2)(b) of Rs. 23,67,789/- and the same is deleted. Ground no. 4 is allowed." 10.1 Aggrieved with such order of the CIT(A) the Revenue is in appeal before us. 11. We have considered the rival arguments made by both the sides, perused the orders of the Assessing Officer and the CIT(A) and the Paper Book filed on behalf of the assessee. From the copy of the assessment order which show the breakup of Rs. 23,67,789/- raised by M/s. Saroj Castings Pvt. Ltd., sister concern of the assessee, we find the same includes payment of Excise Duty Rs. 2,89,107/-, Education cess Rs. 5,782/-, Secondary education cess Rs. 2,891/- and VAT of Rs. 2,63,087/- totalling to Rs. 5,60,868/- which are paid t....
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....he Revenue is accordingly dismissed. 15. Ground of appeal No.4 by the Revenue reads as under : "4. On the facts and in the circumstances of the case, and in law, the CIT(A) Kolhapur erred in deleting the addition made u/s 43B of Rs. 13,00,408/- towards payment of sales tax paid for earlier years, by allowing additional ground without giving any opportunity to the AO to examine and rebut this evidence, as required to be given under Sub-Rule (3) of Rule 46A." 15.1 Facts of the case, in brief, are that the assessee, vide its letter dated 16-08-2012 had requested the Assessing Officer to allow the claim of Rs. 13,00,408/- being earlier year's Sales-tax payment, which was inadvertently not claimed in its original return. However, since the claim was not made through a revised return and also as the time limit prescribed under section 139(5) had lapsed, the assessing officer turned down the request made. In doing so he relied on the decision of the Hon'ble Supreme Court in the case of Goetze (India) Limited v/s Commissioner of Income Tax 284 ITR 323 (SC) and accordingly taxed the sum of Rs. 13,00,408/-. 16. Before the CIT(A) the assessee pointed out that since Salestax payment wa....
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....ave already referred to the decisions in Additional Commissioner of Income-tax v. Gurjargravures P. Ltd., 11978] 111 ITR 1 (SC), Jute Corporation of India Limited v. CIT [1991] 187 ITR 688 (SC), Amalgamated Electricity Company Limited v. Commissioner of Income-tax, [1974] 97 ITR 334 (Bom)(FB), and National Thermal Power Company Limited v. CIT [1998] 229 ITR 383 (SC) which clearly uphold the principal enunciated in the case of CIT v. Kanpur Coal Syndicate[1964] 53 ITR 225 (SC), in which the Hon'ble Supreme Court held as under- "If an appeal lies, Section 31 of the Act describes the powers of the Appellate Assistant Commissioner in such an appeal. Under Section 31(3)(a) in disposing of such an appeal the Appellate Assistant Commissioner may, in the case of an order of assessment, confirm, reduce, enhance or annul the assessment; under clause (b) thereof he may set aside the assessment and direct the Income Tax Officer to make a fresh assessment. The Appellate Assistant Commissioner has, therefore, plenary powers in disposing of an appeal. The scope of his power is co-terminus with that of the Income-tax Officer. He can do what the Incometax Officer can do and also direct him to do w....