TaxTMI 
TaxTMI 
2014 (9) TMI 1156
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....eleting the disallowance of Rs. 44,33,976/- made by the A.O. under Section 14A of the Income Tax Act, 1961. 3. The Ld. Commissioner of Income Tax (Appeal)-ll, Ludhiana, on facts as well as in law, has erred in deleting the addition of Rs. 1,46,71,893/- made by the A.O. by disallowing depreciation claimed on Wind Turbine Generator. 4. That the order of the Commissioner of Income Tax (Appeal)-ll, Ludhiana be set aside and that of the A.O. be restored. 5. That the appellant craves leave to add or amend any ground of appeal before it is finally disposed. 3. The assessee in Cross Objections has raised the following grounds: 1. That the learned CIT (A)- II has erred in holding that the provisions of section 14A r.w.r. 8D are applicable to the facts of the case. 2. That it has been ignored that all investment was made out of own funds and section 14A r.w.r. 8D was not applicable. 3. That the learned CIT(A)-II has erred in upholding the disallowance of Rs. 11,31,959/- under rule 8D(ii) of the Income Tax Rules ignoring the fact that there was no element of interest paid which called for any disallowance. 4. That the learned C....
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....132 of the Paper Book of the assessee. 8. The ld. DR for the revenue placed reliance on the order of the Assessing Officer. 9. We have heard the rival contentions and perused the record. We find that similar issue of disallowance under section 36(1)(iii) of the Act on the investment made in the purchase of land arose before the Tribunal in assessee's own case relating to assessment year 2008-09 (supra) and vide order dated 17.01.2013, the Tribunal held as under : "9. We have heard the rival contentions and perused the record. The assessee had made investment totaling Rs. 4.75 crores in the purchase of agricultural land as under: 14/1/2006 9/3/2006 15/2/2007 15/2/2007 11/4/2007 10. The finding of the CIT Rs. 1,50,00,000/- Rs. 20,00,000/- Rs. 2,43,00,000/- Rs. 57,00,000/- Rs. 5,00,000/- (Appeals) vide para 4.1 of the appellate order is that the assessee had furnished the copies of bank accounts reflecting availability of funds on the dates when earlier investments were made and also when payment of Rs. 5 lacs was made during the year. The learned D.R. for the Revenue has not controverted the factual finding of the CIT (Appeals) that the total investment ma....
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....iness purposes. This capital work-in-progress was with regards to the building at Ayali Kalan and the AO has not mentioned even once that this building was not being constructed by the appellant for his business. That being so, no disallowance on this account can be made u/s 36(l)(iii). The disallowance if at all in these circumstances can be made under proviso to section 36(l)(iii). However, for applying the proviso it has to be shown that the appellant had borrowed funds specifically for capital work-in-progress. The AO has not shown that any funds were borrowed for this purpose. The case of CIT Vs. Abhihsek Industries is not applicable in the circumstances of the case. Disallowance made is accordingly deleted. This ground of appeal is therefore allowed." 12. The ld. DR for the revenue has failed to controvert the findings of Commissioner of Income Tax (Appeals) and in view thereof, we find no merit in the ground of appeal raised by the revenue and the same are dismissed. 13. The issue in ground of appeal No. 2 raised by the revenue is against deletion of disallowance made under section 14A of the Act. The assessee has filed the Cross Objections and the ground Nos. 1 to5 ar....
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....or specific borrowings and confirmed the disallowance of Rs. 11,31,959/- on balance interest of Rs. 1,12,85,747/-. But did not deduct the receipt of interest of Rs. 3,02,18,910/-. He also did not deal with the other disallowance of Rs. 11,98,375/- made under rule 8D(iii) (Assessee in CO). 17. The ld. AR for the assessee further filed written submissions in respect of the grounds of appeal raised in the Cross Objections and pointed out that the provisions of section 14A read with Rule 8D of the IT Rules were not applicable as no satisfaction had been recorded by the Assessing Officer. 18. The second plea raised by the ld. AR for the assessee was that under Rule 8D(ii) of the IT Rules, no element of interest paid calls for any disallowance, as the Commissioner of Income Tax 8 (Appeals) did not consider the netting of interest for the purpose of making the disallowance. Further, in respect of the applicability of provisions of Rule 8D(iii) of the Rules, as no expenditure had been incurred for earning the exempt income, there was no merit in the disallowance under Rule 8D(iii) of the Rules. 19. The ld. DR for the revenue placed reliance on the order of the Assessing Officer. ....
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....sed by the Tribunal in assessee's own case in assessment year 2008-09 and the relevant findings of the Tribunal are reproduced at pages 16 & 17 of the appellate order, which are not being reproduced for the sake of brevity, but are being referred to decide the issue. 23. Before the Commissioner of Income Tax (Appeals), the assessee submitted detailed working as before the Tribunal relating to assessment year 2008-09, as per which the disallowance under section 14A of the Act was computed at Rs. 10,49,859/-. The said working is reproduced by the Commissioner of Income Tax (Appeals) under para 4.10 of the appellate order. Further, similar working for assessment year 2009-10 was also filed by the appellant, which is reproduced at pages 18 and 19. As per the said working, the total disallowance under section 14A worked out to Rs. 11,31,959/-. The Commissioner of Income Tax (Appeals) directed the Assessing Officer to recompute the disallowance under section 14A of the Act in accordance with the order of the Tribunal in assessee's own case for assessment year 2008-09. 24. The plea of the assessee before us is that while computing the disallowance under section 14A read with....
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....ection 14A of the Act. We delete the addition made under section 14A read with Rule 8D(ii) at Rs. 33,08,071/-. However, in view of the assessee having incurred various expenditures, the disallowance warranted under Rule 8D(iii) at ½ % of the average of the value of investment at Rs. 672,635/- is upheld. The grounds of appeal No. 1 to 4 raised by the assessee are thus, partly allowed. 25. We direct the Assessing Officer to recompute the disallowance under section 14A read with Rule 8D(ii) of the IT Rules by following our directions in the order relating to assessment year 2008-09 and in respect of netting of interest in Shri Shiv Parshad Agarwal Vs ACIT (supra). However, the disallowance under Rule 8D(iii) is to be computed in line with the provisions of the Act i.e. ½ % of the average of the value of investment and not at the closing value of the investments. The grounds of appeal raised by the revenue are thus, dismissed and the ground Nos. 3 to 5 raised by the assessee in Cross Objections are allowed for statistical purposes. 26. The issue in ground of appeal No. 3 raised by the revenue against the deletion of addition made on account of disallowance of deprec....
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....l of the windmill. The Assessing Officer had allowed depreciation on the same at lower rates. 30. The Mumbai Bench of the Tribunal in Trumac Engineering Co. Pvt. Ltd. Vs. Income Tax Officer (supra) held that transmission lines are part and parcel of the windmill and are entitled to depreciation @ 100%. The CIT (Appeals) while deciding the appeal of the present assessee before us referred to the decision in Trumac Engineering Co. Pvt. Ltd. Vs. Income Tax Officer (supra) and observed as under: "The other judgment cited by the counsel is in the case of Trumac Engineering Company Pvt. Ltd vs. ITO of ITA No. 555/Mum/2003. The issue related to reopening u/s 147 and also to depreciation on the wind mill. As per as reopening was concerned it was decided against the assessee. The other issue were dealt on merits. The assessee had capitalized some of Rs. 42.50 Lakhs being the payment on account of contribution made to GEDA for creation of common sub-station for evacuation of power from wind farm. The AO held the claim of the assessee is not allowable as the payment is not made for creating an asset nor it is owned by the assessee. The assessee failed before the CIT(A) and hence the ....
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....ction of transformer upto DP structure, hence ought to be held as an integral part of wind mill and is consequently entitled for higher rate of depreciation. The facts of the case are identical with the facts of the appellant." 32. The Ahmedabad Bench of the Tribunal in ACIT(OSD) Vs. Parry Engineering & Electronics P. Ltd. in ITA No.3317/Ahd/2011 with C.O.No.44/Ahd/2012 held as under : "4. We have considered rival submissions and perused the orders of the AO and the CIT(A). The depreciation is allowable on renewable energy device which also includes windmill. The depreciation at the rate of 80% is allowable on the entire device which is capable of generating electricity using wind energy. There is no provision in the Act to bifurcate the device into several parts and allow depreciation thereon at different rates of depreciation. The foundation, civil and electrical works are necessary for the installation of the windmill and is clearly part and parcel of the windmill project on which depreciation at the rate of 80% is allowable. The CIT(A) has referred to the decisions of the High Courts while deciding the issue in favour of the assessee. Accordingly, the ground t....