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TaxTMI 
TaxTMI 
TaxTMI 
2014 (9) TMI 1156
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....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 CIT(A)-II has erred in not setting off the receipt of interest against the payment of interest while making ....
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....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 made by the assessee in the earlier years and the sum of Rs. 5 lacs invested during the year were out of its own funds and not out of borrowed funds.....
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....ucted 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 are against the disallowance upheld by the Commissioner of Income Tax (Appeals) under section 14A of the Act read with Rule 8D(ii) and 8D(iii) of the IT Rules. 14. The Assessing....
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....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. 20. We have heard the rival contentions and perused the record. The issue raised vide ground of appeal No. 2 by the revenue and the Cross Objections filed by the assessee are in relation to the applicab....
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.... 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 Rule 8D(ii) of the IT Rules i.e. the interest expenditure relatable to tax, exempt investment is to be worked out on netting of interest basis i.e. the interest received by the assessee is to be considered while lookin....
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....rac12; % 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 depreciation on Wind Turbine Generator. We find that identical issue arose before the Tribunal in assessment year 2008-09 and the Tribunal vide paras 28 to 31 held as under : "28. We have heard the rival contentions and perused the record. T....
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.... 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 appeal before the Hon'ble Tribunal. The Tribunal examined the facts of the case in detail and held as under:- "Considering the rival submissions, we are of the view that the assessee's appeal is of be allowed on merit. Firstly, it is to be seen that these machineries h....
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....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 taken in the appeal of the Revenue with regard to the depreciation and additional depreciation on the foundation, civil & electrical works, installation, payment to GEDA is dismissed. However, with regard to depreciation on the capitalized interest, there is no finding in the orders of the AO and the CIT(A)....