TaxTMI 
TaxTMI 
2023 (8) TMI 1523
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....307/- incurred by the Appellant towards Pooji and Festival expenses on the contention that the same ha: not been laid out wholly and exclusively for the purpose of business of the Appellant. The disallowance made by AO and sustained by Ld. CIT(A) is arbitrary baseless and not justified. 3 (a). Ld. CIT (A) erred in confirming addition/disallowance of Rs. 26,950/- under section 14A of the Act read with Rule 8D of the Rules. 3(b). Ld. CIT (A) erred in denying the Appellant's contention that for AY 2012-13, no expenses have been incurred for earning exempt income and has wrongly applied Rule 8D without appreciating the facts of the Appellant's case. The disallowance made by AO and sustained by Ld. CIT(A) is arbitrary baseless and not justified. 4. Ld. CIT (A) erred in confirming addition/disallowance of Rs. 17,356/- for delayed payment of Employee's Contribution to Provident Fund/Employee State Insurance beyond the statutory due date prescribed under the governing statute. The disallowance made by AO and sustained by Ld. CIT(A) is arbitrary baseless and not justified. 5. Ld.CIT (A) erred in confirming addition/disallowance of Rs. 2,16,032/- u/s.40(a)(ia) allegin....
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....issed as withdrawn. 6. Now, we shall be taking up Ground No.2 of the assessee's appeal pertaining to addition/disallowance of Rs. 1,73,307/- incurred by the assessee towards Pooja & Festival expenses. The Ld.AR of the assessee submitted that this ground is squarely covered by the assessee in the case of DCIT v. Godawari Power & Ispat Ltd. and Anr. reported in [2022] 193 ITR 0869 (Raipur-Trib.), wherein, the co-ordinate Bench of the ITAT Raipur has held that expenses incurred on the occasion of any Pooja & Festival expenses are in the nature of business expenditure and thus, allowable as deduction. The relevant paras of the judgement are extracted as under: 39. In appeal, the Id. CIT(A) restricted such disallowance to Rs. 12,87,978/- and allowed Rs. 3.50,000/-. While doing so, he observed that except Rs. 3,50,000/- incurred towards purchase and distribution of sweets, the balance amount does not relate to the business. 40. Aggrieved with such order of the Id. CIT(A), the Revenue is in appeal before the Tribunal. 41. We have considered the rival arguments made by both the sides and perused the material available on record. We find identical issue had come up before the Tribu....
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....d also M/s.Chhattisgarh Steel & Power Ltd., (supra), however, since the order by the Hon'ble jurisdictional High Court in the case of M/s. Hira Ferro Alloys Ltd.(supra) wherein the issue was decided against the assessee, was not under consideration of the ITAT while the aforesaid two orders were passed by the ITAT, we cannot go by the contentions of the Ld AR. In the present case the Ld. AO has made the addition following the order of the Hon'ble Jurisdictional High Court, which is binding on us, wherein the issue pertaining to puja expenses has been discussed in Para Nos.11-19 of the said order, the same are extracted here under: 11. The short question involved in this appeal is, whether the assessee, a limited company registered under the Companies Act, can claim deduction towards expenditure incurred by the company in Puja functions, including Vishwakarma Puja performed in the factory premises under s. 37(1) of the Act? 12. The AO relying upon the judgment in the matters of Sanghameshwar Coffee Estates Ltd. (supra) and Kolhapur Sugar Mills Ltd. (supra) held that the company, which is a creation by legal fiction and not a real person made up of flesh and blood, cannot profes....
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.... under s. 10(2)(xv) of the Act as business expenditure because payments were not for the purpose of business. 15. The case of Brijraman Das & Sons (supra) relates to expenditure incurred by a Hindu trader in Ganeshji ki Puja performed at the time of Mahurat or opening of their account books on the auspicious occasion of Diwali, whereas, in the instant case, the expenditure was incurred by a company incorporated under the Companies Act in Puja and Vishwakarma Puja and as such, the same is distinguishable on facts. 16. The facts of the present case are almost similar to the facts of Sanghameshwar Coffee Estates Ltd. (supra). 17. In the latest judgment in the matter of CIT & Ors. vs. Saravana Spinning Mills (P) Ltd. (2007) 211 CTR (SC) 281 : (2007) 7 SCC 298 the Hon'ble Supreme Court while considering the scope of deductions under s. 37 of the Act, has held in para 21 of the judgment that a particular item of expenditure may be deductible if the expenditure does not fall within ss. 30 to 36; that it should have been incurred in the accounting year; that it should be in respect of a business carried on by the assessee; that it should not be on personal account of the assessee;....
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.... 60% 26958.60 25200.00 113511.00 0.00 65348.00 0.00 100321.60 Total 10554246.52 9236440.00 5321285.00 0.0 3316513.00 406916.00 21388542.52 On perusal of the depreciation chart, it cannot be ascertained that the assessee claimed on any new plant and machinery. The assessee therefore was asked to explain the allowability of additional depreciation with supporting documents, in response, the assessee vide written reply stated that the assessee company has purchased fixed assets amounting to Rs. 1,72,94,687/- and enclosed copy of ledger. As per provision of the Act, additional depreciation is available on the new Plant and Machinery installed and put to use during the year under consideration and not on the addition to the plant and machinery. Since, no new plant and machinery was found to be installed and put to use for the year under consideration, additional depreciation is not allowable as per the provisions of section 32(iia) of the I.T. Act and therefore, Rs. 4,06,916/- is disallowed and added to the total income of the assessee. 12. Adverting to the observations of the AO, the Ld.AR submitted that since there was addition in plant & machinery during th....
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....onal depreciation is available on new plant & machinery installed and put to use during the year under consideration and not on the addition to the plant & machinery. It is further observed by the AO, since no new plant & machinery found to be installed and put to use for the year under consideration, additional depreciation is not allowable as per the provisions of sec. 32(1)(iia) of the Act. On perusal of the order of the Ld.CIT(A), wherein ground pertaining to additional depreciation was discussed at length, the same is extracted as under: 'The next ground of appeal is directed against not considering the claims of additional depreciation of Rs. 4,06,916/- on plant and machinery. It was observed by the AO as under: As per provision of the Act, additional depreciation is available on the new Plant and Machinery installed and put to use during the year under consideration and not on the addition to the plant and machinery. Since, no new plant and machinery was found to be installed and put to use for the year under consideration, additional depreciation is not allowable as per the provisions of section 32(iia) of the IT Act and therefore, Rs. 4,06,916/- is disallowed and ....
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.... per cent, to twenty per cent. It is further proposed to omit the conditions relating to industrial undertaking being new or substantial expansion mentioned in the first proviso to the aforesaid clause (iia) and also to omit the requirements of furnishing details of machinery or plant and report of an accountant mentioned in the third proviso of that clause (iia). This amendment will take effect from 1st April, 2006 and will, accordingly, apply in relation to assessment year 2006-07 and subsequent years." Further reliance is placed to the "Memorandum Explaining the provisions relating to Direct Taxes to the Finance Bill 2005: "Rationalization of rates of depreciation and enhancement of additional depreciation on new machinery and plant. Further, in order to encourage new investment, the initial depreciation on new machinery and plant is proposed to be increased to 20 per cent from the existing level of 15 per cent. The requirement of creating a minimum increase of 10 per cent in installed capacity for availing the initial depreciation is also proposed to be eliminated. Consequently, the initial depreciation will be available to all new plant and machineries except those....
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....owance made by the AO on account of claims of additional depreciation is confirmed and ground no. 6 is dismissed. 14. Ld Sr.DR based on decision of the observations of the Ld CIT(A) submitted that the assessee was failed to furnish the relevant details pertaining to Plant and Machinery, for which claims was made for additional depreciation, as to whether the same were put to use of the impugned plant and machinery for the year under consideration. Under such circumstances the order of the Ld CIT(A) deserves to be sustained. 15. We have considered the rival contentions, perused the material available on records and case law pressed before us. Before discussing and deliberating on the issue first we shall go through the relevant provisions of the act and Explanatory notes on the provisions of the Finance Act to understand the intent of the legislature: section 32(1)(iia) of the Act is set out below: "in the case of any new machinery or plant (other than ships and aircraft), which has been acquired and installed after the 31st day of March, 2005, by an assessee engaged in the business of manufacture or production of any article or thing or in the business of generation or generat....
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....tion dated 28th February, 2005. The modified depreciation rates are effective from Assessment Year 2006-07. Among other things, the rate of depreciation on plant and machinery has been reduced from 25% to 15%. Applicability: From A.Y. 2006-07 onwards. [Section 8] 16. The sole controversy emerged in the present case is that - "Whether the investment in additions to existing plant and machinery during the year under consideration under the present case should be considered as new machinery acquired and installed or not for the purpose of allowing additional depreciation within the meaning of provisions of clause (iia) of sub-section (1) of section 32." 17. On perusal of the orders of authorities below, it is evident that all the other relevant ingredients of section 32(1)(iia) of the Act, were not disputed by the authorities viz. (i) an assessee engaged in the business of manufacture or production of any article or thing or in the business of generation or generation and distribution of power, (ii) any machinery or plant which, before its installation by the assesses, was used either within or outside India by any other person, (iii) any machinery or plant, the whole of the act....