TaxTMI 
TaxTMI 
2025 (2) TMI 1985
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....ion of facts and owing to smallness of delay causing no perceptible prejudice to other side. 3. The Department has raised the following grounds of appeal are as under: "ITA No. 1588/Ahd/2024 (A.Y. 2016-17) 1. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was justified in deleting the Disallowance of deduction u/s 80P(2)(d) of the Act of Rs. 4,04,46,012/- without taking into consideration facts that the assessee could not establish the direct nexus between the funds used for investments and the co-operative society's own funds? 2. Whether on the facts and In the circumstances of the case and in law, the Ld. CIT(A) was justified in allowing the additional depreciation claimed for addition in new machinery in preceding year of Rs. 8,31,15,592/- without taking into consideration the retrospective applicability of the third proviso to Section 32(1)(ii) with respect to the Assessment Year in question? 3. Whether on the facts and in the circumstances of the case and in law, the Ld CIT(A) was justified in allowing depreciation and additional depreciation claimed on CANs and Equipments amounting to Rs. 1,07,64....
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....iation claimed for addition in new machinery in preceding year of Rs. 20,09,93,030/- without taking into consideration the retrospective applicability of the third proviso to section 32(1)(ii) with respect «o the assessment year in question? 3. Whether on the facts and in the circumstances of the case and in Jaw, the Ld. CIT(A) was justified in allowing depreciation and additional depreciation claimed on CANs and equipments amounting to Rs. 1,05,56,281/- when it is clear that milk cans and equipment do not qualify as plant and machinery for the purpose of addition depreciation u/s 32 of the Act? 4. The appellant craves leave to amend or alter any ground or add a new ground which may be necessary. 5. It is therefore, prayed that the order of Ld. CIT(A) may be set aside and that the order of the Ld. CIT(A) may be set aside and that of the assessing officer be restored?" We shall first take up the Department's appeal for A. Y. 2016-17 Ground No. 1: Disallowance of deduction under Section 80P(2)(d) of the Act of Rs. 4,38,09,925/ -. 4. The brief facts of the case are that during the course of assessment, the Assessing Officer observed that t....
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....ssee are Rs. 108.51 crores (14.37 crores capital and Rs. 94.14 crores as reserves and surplus). Further, the Counsel for the assessee submitted that the peak balance of investment in deposit with cooperative banks and societies during the year ending 31.03.2016 amounting to Rs. 95.79 crores, whereas the assessee had shown investments in share and securities of Rs. 19.28 crores as is evident from the assessment order. Therefore, interest free funds are more than investments made by the assessee in shares and deposits and the natural presumption to be made that such investments have been made out of own funds by the assessee. The Counsel for the assessee placed reliance on the decision of Mumbai High Court in the case of Reliance Utilities and Power Ltd. 313 ITR 340 and the decision of Supreme Court in the case of Munjal Sales Corporation 298 ITR 298. Further, the Counsel for the assessee submitted that this issue is covered in favour of the assessee by the decision of ITAT Ahmedabad in assessee's own case for A.Y. 2009-10 in ITA No. 2613/Ahd/2012 as well as in assessee's own case for A.Y. 2012-13 in ITA No. 1905/Ahd/2016. Further it was submitted that the above decisions ....
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....ich deduction under section 80P(2)(d) could be allowed. He did not take such step. Nevertheless, we have examined the facts in the light of earlier years' decisions. The assessee has demonstrated availability of funds as highlighted in sub-paragraphs (iii) and (iv) of its reply submitted before the AO vide letter dated 10.9.2014. It is pertinent to mention that the assessee has made fixed deposits with cooperate banks and societies at Rs. 35.93 cores (Rs.25 crores fixed deposits plus Rs.3.01 crores call deposits plus Rs.7.92 crores investment in cooperative society shares). As against these investments, it has surplus funds of Rs.63.62 cores (Rs.10.19 crores capital plus Rs.53.43 crores reserves and surplus). The ld.AO has not examined availability of these funds with an analytical process. Rather, he made reference to the gross-figure of various years. He has to identify the availability of funds in this year. The assessee has specifically submitted the details, exhibiting nexus between the availability of funds vis-à-vis its investment. It has demonstrated that interest free funds were more than the investment, and therefore, no disallowance could be made with help of ....
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.... for the purpose of business or profession for a period of less than 180 days remaining 10% of the additional depreciation shall be allowed in the immediate subsequent previous year. 6.3 I have gone through the grounds of appeal, assessment order and the submissions of the appellant. The third proviso to section 32 was inserted vide the Finance Act, 2015, with effect from 1.4.2016. It provides that if an asset eligible for additional depreciation under sec 32(1)(iia) has been put to use for less than 180 days in the year of acquisition then in that year the assessee would be eligible to avail only 50% of the prescribed rate of depreciation, however in the subsequent year, the assessee can claim the remaining depreciation. In view of the above, the AO is directed to allow the claim of the appellant. Appellant gets relief. Ground number 3 of appeal is allowed." 15. The Department is in appeal before us against the aforesaid relief granted by Ld. CIT(A). 16. Before us, Ld. D.R. placed reliance on the observations made by the Assessing Officer in the assessment order. 17. In response, the Counsel for the assessee placed reliance on the observations made by the Ld. CIT....
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....nt assessment proceedings, therefore, we are of the considered view that the addition is liable to be deleted. 19. In view of the above, we are of the considered view that there is no infirmity in the order of Ld. CIT(A) so as to call for any interference. 20. In the result, Ground No. 2 of the Department's appeal is dismissed. Ground No. 3: Disallowance of depreciation and additional depreciation claimed on Can's and Equipment amounting to Rs. 1,07,64,866/- 21. The brief facts in relation to this ground of appeal are that during the course of assessment proceedings, the Assessing Officer disallowed the assessee's claim for depreciation on Milk Cans and Equipments amounting to Rs. 1,07,64,866/- on the ground that they do not qualify as "Plant and Machinery". In appeal Ld. CIT(A) allowed the appeal of the assessee with the following observations: "7.2 During the course of appellate proceedings, it is submitted that the milk CANs are part of the entire plant and machinery used for the purpose of manufacturing milk and milk products. 7.3 I have gone through the submissions of the appellant. The Coordinate Bench of the ITAT vide ITA No. 1905/Ah....