TaxTMI 
TaxTMI 
TaxTMI 
2025 (9) TMI 34
X X X X Extracts X X X X
X X X X Extracts X X X X
....wance of Rs. 2,01,376/- holding that the depreciation on UPS is allowable @ 60. 2. On the facts and circumstance of the case and in law, the Ld. CIT(A) has erred in directing the AO that out of the addition of Rs. 19,31,438/- on account of disallowance of software expenses treated as capital expenditure, annual maintenance charges be treated as revenue expenditure whereas the annual maintenance charges are inseparable part of software expenses. 3. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in directing the AO to allow expenses amounting to Rs. 1,45,52,066/- under section 37, whereas AO has made specific disallowance u/s. 35(2AB) of the Act. 4. On the facts and circumstances of the case and in law, the CIT(A) has erred in reducing the disallowance to Rs. 3,11,98,481/- as against total disallowance of Rs. 3,44,39,377/- made by the AO u/s. 80JJAA. 2. Brief facts of the case are that assessee filed its return of income declaring total income of Rs.2,81,31,40,320/- under the normal provision of the Act and an income of Rs. 2,76,47,08,926/- u/s. 115JB of the Act, ITR was e-filed on 28.9.2010 and the same was processed u/s. 143(1) of the Act and....
X X X X Extracts X X X X
X X X X Extracts X X X X
....O held that only the expenses incurred on in-house research and development are eligible for deduction and expenses incurred on testing activities outside the approved facilities are not admissible. However, Ld. CIT(A) has not disputed the genuineness of the expenses but has disallowed them u/s. 35(2AB) of the Act. The claim for weighted deduction is not justified, hence, the addition was confirmed to the extent of Rs. 48,50,689/- which in our considered opinion do not require any interference, hence, we affirm the same and dismiss the ground no. 3 raised by the revenue. 7. As regards ground no. 4 relating to disallowance of deduction u/s. 80JJAA amounting to Rs. 3,44,39,377/-. Out of which was the CIT(A) confirmed the addition amounting to Rs. 32,40,896/-. AO noted that additional salary paid to workers who do not quality as workmen as per section 2(s) clauses (iii) and (iv) of the Industrial Dispute Act cannot be considered for calculation of 80JJAA deduction. AO further noted that the claim u/s. 80JJAA for earlier years (AY 2008-09 & 2009-10) cannot be accepted as they were rejected in earlier years. However, Ld. CIT(A) has noted that the discrepancies pointed out in the claim ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....not entitle to a higher depreciation rate of 60% as applicable to computers and will fall in the category of plant and machinery with 15% depreciation applicable. However, assessee has claimed depreciation at 80% on energy savings device. As the said UPS are assets which fall under category plant and machinery eligible for depreciation @15%, the excess depreciation of Rs. 94,811/- claimed by applying rate of depreciation at 80% on WDV of Rs. 1,45,863/- was disallowed, which was confirmed by the Ld. CIT(A). Ld. AR has submitted that there has been no addition in the block of assets in relation to energy savings devices during the year under consideration and the claim of 80% depreciation on energy saving devices was not pressed before the ITAT in the preceding year i.e. AY 2009-10. It was submitted by the Ld. AR that he is not pressing for 80% depreciation in the current assessment year as well, but the disallowance computed by the AO is incorrect which needs to be corrected. The calculation of depreciation on energy saving devices as per the AO order alongwith the correct calculation is given below:- WDV of asset as on 01.04.2019 (as adopted by the AO) Rs. 1,45,863/- Depreciatio....
X X X X Extracts X X X X
X X X X Extracts X X X X
....essee between 01.01.2009 to 01.10.2009 being eligible for depreciation @50%." In view of above facts and circumstances and respectfully following the precedent, as aforesaid, this ground of appeal raised by the assessee is allowed. 12. As regards ground no. 4 relating to capitalization of software expenses is concerned. We have already decided this issue in the Revenue's appeal, as aforesaid while dealing with ground no. 2 by upholding the action of the Ld. CIT(A), hence, this ground is dismissed as such. 13. As regards ground no. 5 relating to provision for warranty is concerned, we note that before the AO it was the contention of the assessee that the provision for warranty is not a contingent liability is ab-initio incorrect. The liability crystallizes in the event of any manufacturing defect occurring in the product and the same being accepted. Such liability is allowable if the determination of the same is based on a scientific method and is consistently followed by the assessee. The figures of warranty paid to total sales defy the logic of being scientific. The wide fluctuations in percentage terms to total turnover defy any scientific method used to create the provision fo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Del/2017 (AY 2012-13) and ITA No. 7410/Del/2019 (AY 2013-14) 16. Some of the issues viz. Prior Period Expenses; Disallowance of Provision for Warranty; Disallowance of Claim u/s. 80JJAA; Denial of Higher Deprecation @50% in respect of high-end vehicles and Disallowance u/s. 14A raised in these three appeals of the assessee, have already been decided in favour of the assessee in Assessee's ITA NO. 2619/DEL/2015 (AY 2010-11). Following the consistent view, as aforesaid, these grounds are also allowed in favour of the assessee. 18. Issue relating to depreciation of electrical installation raised in assessment years 2011-12 & 2012-13 are concerned, AO noted that electrical fittings are attached with plant and machinery and are part thereof and hence, eligible for depreciation @15% applicable to plant and machinery is not acceptable because electrical fittings have maintained their individual identity inspite of being attached to plant and machinery and CIT(A) confirmed the same. During the hearing, Ld. AR submitted that the asset falling under the head 'plant and machinery-electrical' comprises mainly of generator, DG set, invertors and batteries installed in the factory located at H....