TaxTMI 
TaxTMI 
TaxTMI 
2025 (11) TMI 1829
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....e by the A.O invoking Section 14A read with rule 8D. The disallowance made by the A.O and confirmed by the Ld. CIT(A) is arbitrary, baseless and not justified. 4. Ld. CIT(A) erred in confirming disallowance of Rs. 8,23,418/- made by the A.O on account of delayed payment of employees share of contribution to PF/ESI. The disallowance made by the A.O and confirmed by the Ld. CIT(A) is arbitrary and not justified. 5. Ld. CIT(A) erred in confirming disallowance of Rs. 8,06,670/- made by the A.O on account of addition depreciation claimed by the appellant. The disallowance made by the A.O and confirmed by the Ld. CIT(A) is arbitrary, illegal and not justified. 6. The appellant reserves the right to amend, modify or add any of the ground/s of appeal." 2. At the very outset, the Ld. Counsel for the assessee submitted that he is not pressing Ground of appeal No.4 in view of the judgment of the Hon'ble Supreme Court in the case of Checkmate Services Ltd. Vs. CIT, 448 ITR 518 (SC). Having heard the submissions of the Ld. Counsel, the Ground of appeal No. 4 is dismissed as not pressed. 3. Ground of appeal No.6 being general hence adjudication not called for. ....
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....2 pertains to the addition of Rs. 1,60,458/- on account of expenses towards donation & charity. In this regard, the relevant discussion made by the A.O in the assessment order are culled out as follows: "3. On verification of Profit and Loss Account it was found that Rs. 1,60,458/- was debited on account of charity and donation expenses grouped under miscellaneous expenses. On verification the detail of the expenditure not found to be available as business expenditure otherwise allowable u/s 80G of the I.T. Act and supported with required documents. The fact of the case was found that the amount is not allowable as per provisions of section 80G of the IT Act, as the expenditure is not supported with required documents. Therefore Rs. 1,60,458/- is disallowed and added to the total income of the assessee." 8. In this regard, the Ld. Counsel for the assessee submitted that the assessee had made various donation expenses and charity. That similar expenses had been allowed in the case of sister concern of the assessee in the case of DCIT-1(2), Raipur (C.G.) Vs. Godawari Power & Ispat Ltd., ITA No.365/RPR/2014 and CO No.12/RPR/2018 for A.Y.2011-12, dated 01.10.2018 wherein it....
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.... 35. After hearing both the sides, we find identical issue had come up before the Tribunal in assessee's own case for assessment year 2009-10 and 2010-11. We find the Tribunal vide ITA Nos.358 to 360/RPR/2014 order dated 18.01.2018 has decided the issue at para 47 of the said order by observing as under :- "47. We have heard ld. D.R. and perused the record of the case. We find that the CIT(A) has relied on the decision in the case of Modi Industries (supra) and Hon'ble Karnataka High Court in the case of CIT vs. Infosys Technologies Ltd. (supra), wherein, it has been held that the expenditure incurred on social responsibility was laid out or expended wholly and exclusively for purposes of business. The CIT(A) has referred to the amendment made in Finance Act (No.2) 2014 w.e.f. 1.4.2015 in Section 37, wherein, it is declared that for the purposes of sub-section (1) any expenditure incurred by an assessee on the activities relating to corporate social responsibility referred to in section 135 of the Companies Act, 2013 shall not be deemed to be an expenditure incurred by the assessee for the purposes of the business or profession. The CIT(A) has held that there was ....
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....le for the investment made by the assessees in bonds/shares using interest free funds, under Section 14A of the Act. In other words, if investments in securities is made out of common funds and the assessee has available, non-interest-bearing funds larger than the investments made in tax- free securities then in such cases, disallowance under Section 14A cannot be made." 11. Also, we find that the Hon'ble High Court of Bombay in the case of Commissioner of Income Tax Vs. HDFC Bank Ltd. (2014) 366 ITR 505 (Bom.) on the aforesaid issue has held and observed as follows: "4. We do not agree. In the case at hand, as recorded by the ITAT, undisputedly the Assessee's own funds and other noninterest bearing funds were more than the investment in the tax free securities. The ITAT therefore held that there was no basis for deeming that the Assessee had used the borrowed funds for investment in tax free securities. On this factual aspect, the ITAT did not find any merit in the contention raised by the Revenue and therefore, accordingly answered the question in favour of the Assessee.............." Considering the aforesaid facts and circumstances and the judicial pronouncem....
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....t provision of Section 32(1)(iia) of the Act including proviso which are extracted as follows: "32. (1) In respect of depreciation of- (i) buildings, machinery, plant or furniture, being tangible assets; (ii) know-how, patents, copyrights, trade marks, licences, franchises or any other business or commercial rights of similar nature, being intangible assets acquired on or after the 1st day of April, 1998, owned, wholly or partly, by the assessee and used for the purposes of the business or profession, the following deductions shall be allowed- (i) in the case of assets of an undertaking engaged in generation or generation and distribution of power, such percentage on the actual cost thereof to the assessee as may be prescribed; (ii) in the case of any block of assets, such percentage on the written down value thereof as may be prescribed: Provided that no deduction shall be allowed under this clause in respect of- (a) any motor car manufactured outside India, where such motor car is acquired by the assessee after the 28th day of February, 1975 but before the 1st day of April, 2001, unless it is used- (....
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....ler"; (b) the expressions "heavy goods vehicle", "heavy passenger motor vehicle", "light motor vehicle", "medium goods vehicle", "medium passenger motor vehicle", "maxi-cab", "motor-cab", "tractor" and "road roller" shall have the meanings respectively as assigned to them in section 2 of the Motor Vehicles Act, 1988 (59 of 1988): Provided also that, in respect of the previous year relevant to the assessment year commencing on the 1st day of April, 1991, the deduction in relation to any block of assets under this clause shall, in the case of a company, be restricted to seventy five per cent of the amount calculated at the percentage, on the written down value of such assets, prescribed under this Act immediately before the commencement of the Taxation Laws (Amendment) Act, 1991: Provided also that the aggregate deduction, in respect of depreciation of buildings, machinery, plant or furniture, being tangible assets or know-how, patents, copyrights, trademarks, licences, franchises or any other business or commercial rights of similar nature, being intangible assets allowable to the predecessor and the successor in the case of succession referred to in claus....
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....mputing his total income; (iia) 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, transmission or distribution of power, a further sum equal to twenty per cent of the actual cost of such machinery or plant shall be allowed as deduction under clause (ii) : Provided that where an assessee, sets up an undertaking or enterprise for manufacture or production of any article or thing, on or after the 1st day of April, 2015 in any backward area notified by the Central Government in this behalf, in the State of Andhra Pradesh or in the State of Bihar or in the State of Telangana or in the State of West Bengal, and acquires and installs any new machinery or plant (other than ships and aircraft) for the purposes of the said undertaking or enterprise during the period beginning on the 1st day of April, 2015 and ending before the 1st day of April, 2020 in the said backward area, then, the provisions of clause (iia) shall have effect, as if for the words "tw....
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.... ACT, 2005 F. NO. 153/120/2005-TPL GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF REVENUE CENTRAL BOARD OF DIRECT TAXES New Delhi, the 27th February, 2006 3.6 Enhancement of the rate of additional depreciation on new machinery and plant and withdrawal of certain conditions - Under the existing provisions of clause (iia) of sub-section (1) of section 32, additional depreciation is allowed at the rate of fifteen per cent of the 9 . actual cost of the new machinery and plant (other than ships and aircraft) acquired and installed after the 31st day of March, 2002. Additional depreciation is allowed in the case of a new industrial undertaking during any previous year in which it begins to manufacture or produce any article or thing on or after the 1st day of April, 2002 or to any industrial undertaking existing before that date if it achieves substantial expansion during the previous year by way of increase in its installed capacity by not less than ten per cent. In order to encourage investment, the Finance Act, 2005 has amended section 32 to increase the rate of additional depreciation to twenty per cent on new machinery and plant other....
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....ure, it is clearly emanated that the modification in section 32(1)(iia) of the Act, were made with the intent to encourage further investments by the assessee's 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. Since the conditions pertaining to allowing of additional depreciation to new industrial undertakings and expansion in installed capacity were also dispensed with, it can be easily interpreted that addition to plant and machinery, subject to certain conditions under the second proviso to section 32(1)(iia) of the Act, are entitled for additional depreciation. Our interpretation is further fortified by the order of ITAT Delhi in the case of EFACEC Switchgear India P. Ld.(supra) where in it was the observation that tools, dies, jigs, etc., are used by the appellant for its business of manufacturing switchgear products, it is evident that moulds, dies, and tools are not independent of the plant and machinery, but are parts of the machinery. Once they are worn out, the machines cannot turn out the product to the business specifications and this has to be obtained only on a replac....