TaxTMI 
TaxTMI 
2021 (9) TMI 278
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.... 2. The learned CIT erred in disallowing deduction under section 32AC without appreciating the fact that the said deduction is beneficial provision and accordingly, where two views are possible, the view beneficial to the taxpayer should be adopted. 3. The learned CIT erred in disallowing deduction under section 32AC of the Act without appreciating the fact that for the purpose of section 32AC the significant date is the date of installation. If installation falls after 31 March 2013 but before 31st March 2015, the appellant would be entitled to the deduction under section 32AC. 4. The learned CIT erred in not considering the detailed submission made by the appellant vide its letter dated 6 March 2018 and in directing the AO to disallow deduction under section 32AC of the Act in respect of new assets acquired and installed during the FY 2013-14 with invoice date before 1st April 2013. 5. The learned CIT erred in directing the AO to initiate penalty under section 271(l)(c) of the Act mechanically, without giving any opportunity to the appellant to make any submission. The act of the CIT in giving such direction to initiate penalty is ultra-vires an....
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.... in progress(CWIP)"carried forward from earlier assessment years and claimed the deduction on the same u/s 32AC of the Act and therefore the claim of the assessee was disallowed Therefore, he noted that as per section 32AC of the Act, the deduction under this section can be claimed by an assessee, 'where the assesses being a company, engaged in the business of manufacture and production of any article or thing, acquires and installs new assets being plant & machinery after 31 day of March 2013 but before the 1st day of April 2015.' That in the case of assessee, the evidence of acquisition and installation of new assets being plant & machinery is not submitted by the assessee. That as the assessee company had failed to prove the acquisition and installation of machinery and its capitalization during F.Y.2013-14, the claim of the assessee is not acceptable. That omission treat as income has resulted in under assessment of income of Rs. 18,56,46,466/- and short Levy of tax of Rs. Rs. 6,31,01,234/-.Hence, he held that the prima facie, he is satisfaction that the order passed by the A.O. is erroneous in so far as it is prejudicial to the interest of revenue. A notice u/s. 263 dat....
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....lly, and since as provision for promoting economic growth has to be interpreted liberally, the restriction on it too has to be construed so as to advance the objective of the provision and not to frustrate it. While interpreting the various provisions, the Court must not adopt a hyper technical approach and to apply cut-and-dry formula. A pragmatic approach should be adopted so that the object of the introduction/insertion of a particular provision could be achieved. * The object of provisions of taxing statute being to promote the setting of the new units and to increase the production of goods such provision has to be interpreted liberally so that the object can be achieved, as held by Supreme Court in the case of Commissioner Trade Tax vs. DSM Group of Industries, reported in 2005 UPTC page 121. Similar views have been expressed in the following Supreme Court decisions: * Kamlapat v. CIT (73 ITR 702) (SC); * CIT v. Strawboard Manufacturing Co. Ltd. (177 ITR 431)(SC) at page 434, and * CIT v. South Arcot District Co-operative Marketing Society Ltd. (176 ITR 117) (SC) at page 119. The Company has to also submit that section 32AC is a be....
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....dice to the above, out of total addition to new assets of Rs. 1,23,76,43,109 , on which deduction of Rs. 18,56,46,466 under section 32AC of the Act has been claimed, the Company hereby provides details of new assets which was purchased before 1st April 2013 and those purchased after 1st April 2013: Units Total addition on which investment allowance under section 32AC has been claimed New assets with invoice date before 1^st April 2013 New assets with invoice date after 1st April 2013 TMS/TAPS 3,32,14,322 25,55,261 3,06,59,061 RAPS 7,77,42,3724 70,91,45,478 6,82,78,246 KAPS 1,61,75,734 2,06,620 1,59,69,114 MAPS 21,74,56,216 - 21,74,56,216 NAPS 10,20,77,248 6,77,20,136 3,43,57,112 KAIGA 9,12,95,865 1,05,63,890 8,07,31,975 Total 1,23,76,43,109 79,01,91,385 44,74,51,724 Accordingly, even where the contention of the Company that it is entitled to deduction under section 32AC of the Act of entire amount is not accepted, it would still be eligible to claim deduction of Rs. 6,71,17,758, being 15% of Rs. 44,74,51,724 assets where invoice date falls after 1st April 2013." However, lear....
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....Page 75 are details of addition to fixed assets, as per Annexure V(A) Clause 18, which were put to use during the financial year 2013-14 or commissioned during the year. 2.3 Whether the asset is put to use during the year is of no consequence for the purpose of deduction u/s 32AC where only condition required to be fulfilled is acquisition and installation of new asset after 31.03.13 but before 01.04.2015. No details have been submitted for "Calculation of Investment Allowance u/s 32AC". 2.4 Details submitted by the assessee before the AO are as per Index on Pages 15 & 16 and Pages IS & 19 of the APB. * At APB Page 16 of the Paper Book, assessee is stated to have placed on record, "Calculation of Investment Allowance u/s 32AC". The details of addition to assets are stated to be provided vide letter dated 07.07.2016. * The above letter dated 07.07.2016 submitted at APB Page 76 shows that that assessee has submitted certain details of Moveable & Immovable Assets as per Schedule 11 of Audited Financials. The details so submitted have not been placed on record before the Hon'ble ITAT. * As per APB Page 19, deduction for addition to plant....
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....reciation to the assessee as the condition for eligibility u/s32(l)(iia) and section 32ACare entirely different. 3.4 The difference can further be appreciated by comparing the Provisions of Section 32AC with the Provisions of Section 32A. 3.5 A plain reading of the Provisions of Section 32A. would show that 'acquisition", 'installation" and 'put to use' are three different / independent events or prerequisites for claiming deduction u/s 32A * For claiming deduction u/s 32A, the 'acquisition' of Plant & Machinery is not a prerequisite, though it may be a prerequisite for claiming deduction u/s 32A on Ship & Aircraft, * For Plant & Machinery, the assessee is allowed deduction u/s 32A either in the previous year when it is installed or in the previous year when it is first "put to use" in the immediately succeeding Pr. Yr. [the latter clause i.e. first "put to use" also applies to Ship & Aircraft] 3.6 The phrase used in section 32A is "the machinery and plant was installed", whereas the phrase used in section 32AC is "acquires and installs new asset" which shows that "acquisition" during the relevant year is an impor....
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....n of Plant & Machinery not in dispute 4.1 It may be submitted in this regard that the CIT in Para 4.2 has clearly observed that "the evidence of acquisition and installation of new assets being plant & machinery is not submitted by the assessee." 4.2 The assessee has filed additional evidence before the Hon'ble Tribunal, in support of assembly, erection and commissioning of LR -11350 Liebherr Crawler Crane at RAPP-7 & 8 Site by M/s Liebherr. * On page APB Page 88, it is stated that first load was tested on March, 2013 * The "Report of Examination of Lifting Machines" on APB Page 91 clearly states that the crane was tested on 07.03.2013 at the site as RAPP-7 & 8 Site and no defect was found. * At APB Page 94 it is clearly stated that the crane has been tested and accepted on 07.03.2013. It clearly shows that the crane was installed during FY 2012-13 i.e. in the earlier financial year. 4.3 The report submitted on APB Page 103 is self serving report and contrary to facts on record. In this report the transportation and assembly of LR -11350 Liebherr Crawler Crane at RAPP-7&8Site, an independent project, has been clubbed with di....
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....ment year commencing on the 1st day of April, 2015, of a sum equal to fifteen per cent of the actual cost of new assets acquired and installed after the 31st day of March, 2013 but before the 1st day of April, 2015, as reduced by the amount of deduction allowed, if any, under clause (a). (1A) Where an assessee, being a company, engaged in the business of manufacture or production of any article or thing, acquires and installs new assets and the amount of actual cost of such new assets acquired during any previous year exceeds twenty-five crore rupees and such assets are installed on or before the 31st day of March, 2017, then, there shall be allowed a deduction of a sum equal to fifteen per cent of the actual cost of such new assets for the assessment year relevant to that previous year: Provided that where the installation of the new assets are in a year other than the year of acquisition, the deduction under this sub-section shall be allowed in the year in which the new assets are installed: Provided further that no deduction under this sub-section shall be allowed for the assessment year commencing on the 1st day of April, 2015 to the assessee, which i....
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....an ship or aircrafts), acquired and installed by an assessee being a company engaged in the business of manufacture or production of any article or thing during any financial year, exceeds twenty-five crore rupees, if the acquisition and installation is made during the same financial year. It is proposed to amend the said sub-section so as to provide that the deduction under the said sub-section shall be allowed if the assets are installed on or before the 31st March, 2017. It is further proposed to insert a new proviso in the said subsection so as to provide that where the installation of the new assets are in a year other than the year of acquisition, the deduction under the said sub-section shall be allowed in the year in which such new assets are installed. These amendments will take effect retrospectively from 1st April, 2016 and will, accordingly, apply in relation to the assessment year 2016-2017 and subsequent years. 7. A reading of the above provision shows that in clause(i) thereof, the word used for criteria for depreciation is " acquires and installs new assets after 31/03/2013 but before the 01/04/2015". 8. Sub section(1A) of the above ....
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....ired earlier but installed during the year are eligible for depreciation under this section cannot be said to be a legally unsustainable view. 14. Now, we refer to the provisions of section 263 of the Act, which read as under:- 263. (1) The [Principal Chief Commissioner or Chief Commissioner or Principal Commissioner] or Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by the Assessing Officer is erroneous in so far as it is prejudicial to the interests of the revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment and directing a fresh assessment. 15. While examining the aforesaid provisions of the Act Hon'ble Supreme Court in the case of Malabar Industries vs CIT (supra) has expounded that when the AO has taken a possible view and the Ld.CIT is not in agreement with the same, it would not give rise to the jurisdiction under section 263 of the....