2025 (2) TMI 1763

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....l depreciation of Rs. 2,23,91,990/- claimed by the assessee for AY 2016-17 ignoring the fact that the plant and machinery was put to use in FY 2014-15 which is relevant for AY 2015-16?" "ii. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was right in deleting the disallowance made by AO in respect of donation claimed by the assessee both in CSR expense as well as 80G amounting to Rs. 87,16,724/-?" 3. The brief facts of the case are that the assessee is engaged in business of manufacturing and sale of chemical adhesives for automotive and industrial lubricants for treatment of fuels. The assessee company provides advance chemical formulas designing to meet the specific needs of transportation and industrial market. During the impugned assessment year, the assessee claimed the additional depreciation under section 32(1)(iia) amount to Rs. 2,23,91,990/- which pertained to the plant & machinery put to use for F.Y. 2014-15 for less than 180 days. The assessee company had purchased machinery of Rs. 15,45,70,133/- from October, 2013 to March, 2014 on which depreciation was claimed @15% as per section 32 of the Act. In relation to section 3....

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....gible for additional depreciation under section 32(1)(iia) on account of ordinary depreciation. The Ld.AR relied on the relevant paragraph of the appeal order, which is as under:- "In view of the above discussion and sincerely following the Hon'ble Supreme Court and other judiciary decision, in my considered opinion, the amendment introduced by Finance Act 2015 effective from 1st April 2016, based on the aforesaid discussion, it is submitted that the proviso to section 32(1)(ii) is curative in nature and was introduced to overcome the hardship faced by the appellant who used the asset for less than 180 days during the year. The proviso should therefore have retrospective effect and hence the claim of additional depreciation amounting to Rs. 2,23,91,990/- made by the appellant ought to be allowed. It is a well settled position by a number of judicial precedents that if the use of plant and machinery is for a period of less than 180 days, and the entire amount of additional depreciation cannot be claimed in the subject assessment year, the balance unclaimed amount can be claimed in the subsequent assessment year. Hence, the appeal is allowed." 6. Related to argument on di....

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....d by both parties and reviewing the documents on record, we observe that Section 32(1)(iia) of the Act is as follows: "32(1)(iia): In the case of any new machinery or plant (excluding ships and aircraft) acquired and installed after March 31, 2005, by an assessee engaged in the business of manufacturing or production of any article or thing [or in the business of generation, transmission, or distribution of power], an additional deduction equal to 20% of the actual cost of such machinery or plant shall be allowed under clause (ii)." We note that this provision was duly amended by the Finance Act, 2015, effective from 01/04/2016. However, the amendment was curative in nature, as upheld by the ITAT Kolkata Bench in the case of DCIT vs. National Engineering Industries Ltd, (2002) 135 taxmann.com 193. Considering the ruling of the ITAT, it is evident that the amendment introduced by the Finance Act, 2015 was aimed at promoting investment and should, therefore, be considered a welfare measure. Consequently, this beneficial provision should be interpreted liberally in favor of the assessee. Furthermore, the amendment under the Finance Act, 2015, effective from 1/04/2016, w....

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....owards CSR activities are an allowable deduction u/s. 80G of the Act. The CSR expenses are governed by section 135 of the Companies Act, 2013, Schedule VII of the Act and Companies (CSR) Policy Rules, 2014 where companies having net worth of Rs. 500 crores or more or turnover of Rs. 1000 crores or more or net profit of Rs. 5 crores or more have to mandatorily comply with the CSR provisions specified u/s. 135(1) of the Companies Act, 2013. The above mentioned companies are liable to spend atleast 2% of its average net profit for the immediately preceding three financial years on CSR activities. In the present case, the assessee has contributed Rs. 30 lacs to various educational and charitable trust for which the assessee has claimed 50% of the total donation paid as deduction u/s. 80G of the Act. Prior to the Finance (No.2) Act, 2014, the said expenditure was claimed as 'business expenditure' u/s. 37(1) of the Act where after the insertion of Explanation 2 to section 37(1) of the Act, the CSR expenses referred to in section 135 of the Companies Act, 2013 shall not be deemed to be an expenditure incurred by the assessee for the purpose of business or profession. It is observe....