TaxTMI 
TaxTMI 
2016 (5) TMI 1170
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....f the assessee was taken up for scrutiny and notice under section 143(2) of the Act was issued on 19.08.2010. After considering the details submitted by the assessee, the Assessing Officer has completed the assessment under section 143(3) of the Act by making various additions. 3. On appeal, the ld. CIT(A), partly allowed the appeal filed by the assessee. 4. Aggrieved, the assessee is in appeal before the Tribunal. By relying on the decision in the case of REI Agro Ltd. v. DCIT 144 ITD 141 (Kol), the ld. Counsel for the assessee has submitted that the ld. CIT(A) went in wrong to confirm the order of the Assessing Officer since the disallowance should have been computed by taking into consideration only such investments from which the assessee had actually received the income which is excluded from the total income. Further, he has submitted that the ld. CIT(A) should not have confirmed the disallowance under Rule 8D(2)(iii) since the assessee itself has made disallowance of Rs..2,57,780/-. Therefore, he pleaded that the disallowance made by the Assessing Officer should be deleted. 5. On the other hand, the ld. DR strongly supported the order passed by the ld. CIT(A). 6. We have....
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....on in the case of Godrej & Boyce Mfg. Co. Ltd (supra). With regard to limb (ii) of Rule 8D(2), on perusal of the balancesheet, the ld. CIT(A) has observed that the assessee was having sufficient own funds to take care of its investments. Further, the share capitals and reserves put together the available own funds works out to Rs..1732.32 lakhs (Rs..60 lakhs + Rs..1672.32 lakhs) and the investments was found to be only Rs..729.34 lakhs. The ld. CIT(A) has further noticed from the balance-sheet that these own funds of the assessee can take care of investment even after taking into account investment in fixed assets (Rs..597.98 lakhs). Further, the amount borrowed from the bank is for a specific purpose i.e., cash credit and over draft. Therefore, the interest debited of Rs..2,37,570 cannot be attributed to any borrowings which have gone into investments of exempt income earning avenues. Therefore, the ld. CIT(A) directed the Assessing Officer to withdraw the disallowance made under limb (ii). However, the ld. CIT(A) has observed that limb (iii) to Rule 8D(2) is applicable in the assessee's case. By relying on the decision in the case of Escorts Ltd, 102 TTJ 522, wherein, the ITAT De....
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....ional Finance Ltd. (2006/10 SOT 722 (Delhi)- Trib.), the Delhi Benches of ITAT has held as under: "In light of clear provisions of section 14A, even in case it is not possible to identify expenses incurred in earning income which does not form part of total income, disallowance has to be made on some basis." Further, in the case of Marezban Bharucha v. Asstt. CIT [2007/12 SOT 133 (Mum.-Trib.), the Mumbai Benches of ITAT has held as under: "Where an expenditure is composite one, i.e., relating to taxable receipts as well as non-taxable receipts, Assessing Officer is duty-bound to disallow proportionate amount of expenditure relatable to non-taxable or exempted income by invoking provisions of section 14A." 8. In order to arrive at a reasonable amount of expenditure, which may vary from case to case and situation to situation, the legislature, after taking various factors into consideration, came to a conclusion that such expenses can be reasonably calculated @ 0.5% of the average investments made by the assessee. For this purpose, the legislature has arrived at a common formula to calculate the expenses @ 0.5% of the average investments made as per step-3 of the formula given in ....
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....e assessee is entitled to carry forward 50% of additional depreciation in the succeeding year when the plant and machinery was put in use less than 180 days in the preceding previous year. By following the decision of Cochin Benches of ITAT in the case of Apollo Tyres Ltd. v. ACIT (supra) and the decision of the Hon'ble Karnataka High Court in the case of CIT & Another v. Rittal India Pvt. Ltd. (supra), the Coordinate Bench of the Tribunal in the case of Automotive Coaches & Components Ltd. v. DCIT (supra) has observed and held as under: "5. We have considered the rival submissions on either side and perused the relevant material available on record. Section 32(1)(iia) provides for additional depreciation at the rate of 20%. The Assessing Officer allowed 10% of additional depreciation in respect of the plant and machinery purchased during the year under consideration. The Assessing Officer found that the additions to fixed assets were made in the second half of the financial year, therefore, 50% of additional depreciation has been claimed. The balance 50% was carried forward in the next year. The Assessing Officer found that the additional depreciation is allowable only during the....
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....under clause (i) or clause (ii) or clause (iia) as the case may be." 11. A bare reading of this section 32(1)(iia) clearly says that in case a new machinery or plant was acquired and installed after 31-03-2005 by an assessee, who is engaged in the business of manufacture or produce of article or thing, then, a sum equal to 20% of the actual cost of the machinery and plant shall be allowed as a deduction. It is not in dispute that the assessee has acquired and installed the machinery after 31-03- 2005. It is also not in dispute that the assessee is engaged in the manufacture of article or thing. Therefore, the assessee is eligible for additional depreciation which is equivalent to 20% of the actual cost of such machinery. The dispute is the year in which the depreciation has to be allowed. The assessee has already claimed 10% of the depreciation in the earlier assessment year since the machinery was used for less than 180 days and claiming the balance 10% in the year under consideration. Section 32(1)(iia) does not say that the year in which the additional depreciation has to be allowed. It simply says that the assessee is eligible for additional depreciation equal to 20% of the ....
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.... benefit in the form of additional allowance u/s 32(1)(iia) is one time benefit to encourage the industrialization and in view of the decision of Hon'ble Supreme Court in the case of Bajaj Tempo Ltd. v. CIT [1992] 196 ITR 188, the provisions related to it have to be construed reasonably, liberally and purposive to make the provision meaningful while granting the additional allowance. This additional benefit is to give impetus to industrialization and the basic intention and purpose of these provisions can be reasonably and liberally held that the assessee deserves to get the benefit in full when there is no restriction in the statute to deny the benefit of balance of 50% when the new machinery and plant were acquired and used for less than 180 days. One time benefit extended to assessee has been earned in the year of acquisition of new machinery and plant. It has been calculated @15% but restricted to 50% only on account of usage of these plant & machinery in the year of acquisition. In section 32(1)(iia), the expression used I "shall be allowed". Thus, the assessee had earned the benefit as soon as he had purchased the new machinery and plant in full but it is restricted to 50....
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....arnataka High Court, after extracting the provisions of Section 32(1)(iia) of the Act, found that beneficial legislation has to be interpreted liberally so as to benefit the assessee. Karnataka High Court has also found that the intention of the legislation is to allow additional benefit. The Karnataka High Court opined that the proviso would not restrain the assessee from claiming the balance of the benefit of additional depreciation in the subsequent assessment year. Accordingly, confirmed the order of the Bangalore Bench of this Tribunal. In fact, the Karnataka High Court has observed as follows:- "7. Clause (iia) of Section 32(1) of the Act, as it now stands, was substituted by the Finance Act, 2005, applicable with effect from 0l.04.2006. Prior to that, a proviso to the said Clause was there, which provided for the benefit to be given only to a new industrial undertaking, or only where a new industrial undertaking begins to manufacture or produce during any year previous to the relevant assessment year. 8. The aforesaid two conditions, i.e., the undertaking acquiring new plant and machinery should be a new industrial undertaking, OF that it should be claimed in one year,....