TaxTMI 
TaxTMI 
2017 (5) TMI 246
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....e, depreciation was allowable at the rate applicable to plant & machinery i.e. 15% whereas depreciation to electrical fittings can only be allowed under "furniture & fittings" which also includes electrical items and the applicable rate of depreciation is 10%. 2. Whether on the facts & in the circumstances of the case, the ld. CIT(A) erred in directing the AO to delete the additions representing the disallowance on excess depreciation on UPS/electrical installation from the calculation of Book Profit u/s 115JB by holding that the AO has very limited powers to make adjustments in the P&L a/c of the assessee. 3. Whether on the facts & in the circumstances of the case, the ld. CIT(A) has erred in deleting the adjustments made in the book p....
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.... employs continuous process plant facilities for such manufacturing. The appellant company also has its captive power generation unit to generate and supply electricity to the plant as power constitutes a critical need in steel-and iron manufacturing operations. During the previous year the appellant company has set up a new wire rod mill at a cost of Rs. 36,29,13,887/-. The appellant company also incurred a further cost of Rs. 10,25,19,308/- on electrical installation for wire rod mill consisting of expenditure on control panels such as PCC/PDB/MCCNCB panel, armored/insulated cable, digital drives, electrical sub-station and tower, motors etc. Such installations are inseparable part of the plant or in other words part and parcel of the pla....
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....R 533 (All) and of Ahmedabad Bench decision in Raw Flints (P) Ltd. vs. Income-tax Officer (1987) 21 ITD 207 which held that electrical installations are an integral part of manufacturing process and cannot be divorced from 'plant and machinery'. 3.2 I have considered the submissions made by the authorized representative of the appellant company. To my mind, the assessing officer should allow depreciation on electrical installations @ 15% by considering the same to be part of 'plant and machinery'. In the case CIT vs. Oswal Woollen Mills Ltd. (supra), the Punjab and Haryana High Court applied Berger Paints India Ltd. vs. CIT 266 ITR 99 and followed Bharat Earthmovers vs. CIT 245 ITR 428, CIT vs. Oswal Woollen Mills Ltd. 254 I....
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.... integral part of the assessee's plant, therefore, depreciation was allowable at the rate applicable to plant and machinery. We are also of the considered view that electrical installation is integral to the plant and machinery used for manufacturing steel and as the Assessing Officer has not controverted the contentions of the assessee company hence, Ld. CIT(A) has rightly directed the AO to allow depreciation on electrical installations @ 15% i.e. the rate applicable to 'plant & machinery'. We further note that Ld. CIT(A) was justified in holding that as a natural corollary, additional depreciation amounting to Rs. 1,02,12,533/- is also required to be allowed as the Assessing Officer disallowed the same considering electrical ....
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....A Y 2007-08. In computing the total income under the provisions of the Act the AO made a total disallowance of Rs. 1,48,71,962/- each of which is disputed on merits in the preceding grounds (1) to (2) above. At the same time the AO made an addition of identical sum of Rs. 1,48,71,962/- to the net profit declared by the appellant company. The Apex Court in the case of Apollo Tyres v. CIT [2002] 255 ITR 273 held that the Assessing Officer has the limited power of making increases and reductions as provided for in the Explanation to section 115J. The Assessing Officer does not have the jurisdiction to go beyond the net profit shown in the profit and loss account except to the limited extent provided in the Explanation. In our respectful su....
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....t accordingly." The issue being identical, following the decision of my Ld. predecessor, the AO is directed to delete the addition representing the disallowance on excess depreciation on UPS and electrical installations for the purpose of computation of book profit u/s 115JB of the I.T. Act, which is disputed on merit in the preceding ground nos. 1 and 2 above. Appeal is allowed on this ground." 10. Now the department is in appeal. The ld. DR supported the order of the AO but could not rebut the findings given by the ld. CIT(A). 11. In his rival submissions the ld. Counsel for the assessee reiterated the submissions made before the ld. CIT(A) and strongly supported the impugned order. 12. We have considered the submissions of both the....