TaxTMI 
TaxTMI 
2023 (5) TMI 1345
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....eries were purchased and installed in financial year 2007-08 pertaining to assessment year 2008-09. For this, Revenue has raised many argumentative grounds, which we will deal with while adjudicating the issue. 3. Brief facts are that the assessee company is a domestic company, in which public are substantially interested and engaged in the manufacture of newsprint, printing and writing paper and generation of power. The AO during the course of assessment proceedings noted that the assessee claimed additional depreciation of Rs. 13,15,54,279/- pertaining to assessment year 2008-09. The AO noted that the assessee claimed that some of the plant and machineries were installed more than 180 days in assessment year 2008-09 on which the assessee claimed depreciation only @ 10% and hence, balance 10% depreciation was claimed during the current assessment year. The AO going through the provisions of section 32(1)(iia) of the Act noted that the above depreciable assets which were installed less than 180 days are only eligible for 50% depreciation during the relevant assessment year and no further depreciation is allowable in any assessment year. According to him there is no ambiguity ....
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....l deduction can be availed in the subsequent assessment year, otherwise the very purpose of insertion of Clause (iia) would be defeated because it provides for 20% deduction which shall be allowed 10. It has been consistently held by this Court, as well as the Apex Court, that beneficial legislation, as in the present case, should be given liberal interpretation so as to benefit the assessee. In this case, the intention of the legislation is absolutely clear, that the assessee shall be allowed certain additional benefit, which was restricted by the proviso to only half of the same being granted in one assessment year, if certain condition was not fulfilled. But, that, in our considered view, would not restrain the assessee from claiming the balance of the benefit in the subsequent assessment year. The Tribunal, in our view, has rightly held, that additional depreciation allowed under Section 32(1)(iia) of the Act is a one time benefit to encourage industrialization, and provisions related to it have to be construed reasonably, liberally and purposively, to make the provision meaningful while granting additional allowance. We are in full agreement with such observations made by th....
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.... Aggrieved, assessee preferred appeal before CIT(A). 8. The CIT(A) after detailed discussion noted that though the assessee claimed that the gain is related to expansion project, however it is not able to prove with evidence that the same is relatable to fixed assets. Therefore, the CIT(A) also following the decision of Hon'ble Supreme Court in the case of Woodward Governor India Pvt. Ltd., supra, noted that in case there is a gain, the assessee is required to offer the same as income and if there is a loss, the assessee can claim unrealized loss as expenses. Therefore, the CIT(A) also treated the same as income of the assessee and for this, he observed as under:- I have carefully considered the facts of the case, the AO's finding given in the assessment order and the appellant's submissions made during the appeal proceedings, The assessee is following mercantile method of accounting and as per the Accounting Standard -11, whether any gain or loss on foreign exchange is to be credited or debited to the Profit & loss A/c. Moreover, though the assessee has claimed that the gain is related to expansion project, however he is not able to prove with evidences that the same is relatab....
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....aper and pulp production and power generation capacities and to add related auxiliary equipments as under:- 1) Hard Wood Pulp Mill (300 tpd) 2) Re-Causticising Plant 3) Chlorine Di-oxide Plat (15 tpd) 4) Oxygen Generation Plat 5) Chemical Bagasse Pulp ECF Bleaching Plant (500 tpd) 6) Chemical Recovery Boiler (1300 tpd) 7) Evaporator 8) Turbo Generator (20 MW) 9) Lime Kilin etc. The ld.counsel drew our attention to page 7 of the Annual Report where Mill Development Plan is described. The assessee also gave foreign currency term loans availed for the above project amounting to Rs. 140 Crore (USD 31 Million), which was utilized for acquisition imported fixed assets as listed below:- Project Description Currency Value in Foreign currency Value in INR Supply of Chlorine Dioxide Plant CAD 3326600 126460598 Hardwood Fibre line EUR 12527141 721440732 500 tpd Chemical Bagasse Pulp ECF Bleach Plant SEK 67848513 412275009 Augmentation of Recausticizing Plant USD 3079673 134596016 Supply of Hardwood Chipping Line USD 857478 38106357 Bop instruments - consistency Transmitters EUR 14650 846770 Ball on/off valves and butterfly on/off valve....
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....by the AO at Rs. 4,57,368/- and thereby enhancing the disallowance in regard to expenses claimed against the exempt income by applying the provisions of section 14A r.w. rule 8D of the Income Tax Rules, 1962. 13. We have heard rival contentions and gone through facts and circumstances of the case. We noted that the AO has made disallowance under Rule 8D(2)(iii) i.e., average value of investment of Rs. 4,57,368/- and the CIT(A) enhanced the disallowance to the extent of exempt income i.e., dividend income earned by assessee i.e., Rs. 18,28,080/-. The issue is now covered by the decision of Hon'ble Delhi High Court in the case of Cheminvest Ltd., vs. CIT, 378 ITR 33, wherein it is held that disallowance u/s. 14A r.w. rule 8D can be made to the extent of exempt income earned by the assessee. The CIT(A) has simply followed the decision of Hon'ble Delhi High Court and for which he has not committed any infirmity, hence we affirm the order of CIT(A) and accordingly, this issue of assessee is dismissed. 14. The assessee's appeal is partly-allowed for statistical purpose. ITA No. 896/CHNY/2017 15. The appeal by the assessee in ITA No. 896/CHNY/2017 is ari....
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....fluctuation as detailed below: Forward Premium account 37,07,838 Forward Premium account - Buyers credit 71,19,911 Forward Premium account - LTL 2,44,90,066 Forward Premium account - LTL-MD plan 51,07,510 Total 4,04,25325 The records show that the assessee credited the gain in value of Rs. 46,64.38 lakh to Hedging Reserve account under the liability head in the Balance Sheet. The assessee should have taken only the net loss/gain to Profit & Loss account as per AS 30. Hence, the expenses claimed Rs. 4,04,25,325/- is required to be disallowed. The AO simply noted that the expenditure is capital in nature and he accordingly disallowed by observing as under:- 1. Forward Premium From the submission of the assessee, it is seen that the assessee has claimed an expenditure of Rs. 4,04,25,325/- crores as forward premium relating to forward contracts taken for edging of foreign currency loans. It is also seen that the foreign currency loan were taken for capital expenditure purposes. Forward premium made for capital expenditure to be capitalized as per sec. 43A of the I.T. Act, 1961. In this regard, the claim made by the assessee is disallowed and added back t....