TaxTMI 
TaxTMI 
2015 (8) TMI 844
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....s i.e. AY 2008-09 and 2009-10. The relevant ground as raised in ITA No.1989/Kol/2013 reads as under: " 1. That the Ld. CIT(A) erred in law in deleting the disallowance of Rs. 6294085/- on account of depreciations without appreciating the fact that in the instant case the AO correctly made the said disallowance by applying Explanation 10 to section 43(1)." The facts and circumstances are exactly identical in both the years and we will decide both this issue by this consolidated order. 3. Briefly stated facts are that the assessee received capital subsidy of Rs. 5,04,92,043/- from Govt. of West Bengal by remission of sales tax. The assessee claimed that this subsidy was received for promotion of industries in this state by setting up new industries and even maximum quantum of such subsidy was restricted to a percentage of gross value of fixed capital asset of the new project. Accordingly, the assessee claimed depreciation on the assets including the capital subsidy of the assets. But the AO reduced the case of subsidy from the assets and thereby disallowed to the extent of Rs. 62,94,085/- by observing in para 4 as under: "4. Although the assessee had treated the above rec....
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....preciation u/s. 32 for AY 2007-08 in appellant's case vide his order dated 29.03.2011 in Appeal No. 195/CIT(A)-IV/2009-10 accepting the appellant's plea that subsidy received from West Bengal Government was given as an encouragement for setting up of industries for realization of possibility of industrial resurgence of the State. Upon perusal of West Bengal Incentive Scheme, 1999 under which the subsidy has been given to the appellant, it is noticed that appellant was given a remission of sales tax on sale of finished goods for 11 years (9+2 years) subject to a maximum ceiling of 125% (100% + 25%) of gross value of certain fixed capital assets and also subject to an overall aggregate monetary ceiling of Rs. 75 crores. There is nothing in the said scheme to suggest that the West Bengal government intended to grant the subsidy to meet directly or indirectly the cost of any fixed assets. Mere fixation of ceiling with reference to investment in certain fixed assets being measurement of ceiling cannot lead to inference of subsidy's purpose and fixation of such ceiling to the extent of 125% in appellant's case also suggest that the subject subsidy was not meant for meeting an cost of ass....
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....tion: "Whether on the facts and in the circumstances of the case the learned Income Tax Appellate Tribunal, 'B' Bench Kolkata erred in law in holding that for computing disallowance u/s. 14A of the Income Tax Act, 1961 read with Rule 8D of the Income Tax Rules 1962 effective from the Assessment Year 2008-09." From the above it is clear that the ground regarding depreciation was not admitted by Hon'ble High Court. 5. When this was confronted to ld. Sr. DR he fairly conceded that yes Hon'ble High Court has not admitted the question regarding depreciation on capital subsidy and the issue is finally settled in favour of assessee. We find that the capital subsidy scheme is exactly identical as was in AY 2007-08 and Hon'ble High court has not admitted the question referred to by revenue u/s. 260A of the Act regarding depreciation on capital subsidy. Once Hon'ble High Court has declined to admit the question, order of Tribunal has become final. Accordingly, this issue is covered in favour of the assessee and against the revenue. Hence, we confirm the finding of CIT(A) and this issue of revenue is dismissed. 6. Exactly identical issue is also raised by revenue in ITA No. 10....
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....en the borrowed fund and investment in shares giving exempt income. According to him, the assessee has own funds at about Rs. 2429 lacs and total average investment as on 31.03.2008 at Rs. 365 lacs only and which is also from common funds. According to CIT(A), the assessee has own sufficient funds to meet the cost of investment and in view of this, he deleted the disallowance by observing in para 5.2 as under: "5.2 I have carefully considered the observations of AO made in the assessment order and submission made by the appellant, in the light of the material on record. So far as the disallowance of interest portion under section 14A is concerned, there is no finding that there is/was any direct nexus between the borrowed funds and investments in shares. It is not in dispute that none of the investments held as on 31.03.2008 were made during the current year. It is also not in dispute that appellant's opening own funds were about Rs. 2429 lakhs whereas average total investments as on 31.03.2008 were about S.365 lakhs only and in that view of matter where common pool of funds are involved for investments and own funds are sufficient to meet the cost of whole investments, there ca....