TaxTMI 
TaxTMI 
2026 (8) TMI 485
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....ng the decision of CIT(A) deleting the entire disallowance made by the assessing officer on account of unspent grant? (b) Whether in the facts and circumstances of the case, the learned ITAT has erred in law and on facts in upholding the decision of CIT(A) deleting the addition made by the Assessing Officer regarding interest earned on unutilized grant? (c) Whether in the facts and circumstances of the case, the learned ITAT has erred in law and on facts in upholding the order of CIT(A) deleting the disallowance of excess claim of depreciation w.r.t. assets which were retired from active use? (d) Whether in the facts and circumstances of the case, the learned ITAT while confirming the deletion of the disallowance of excess claim of depreciation w.r.t. assets retired from active use, has erred in law and on facts in relying on the provisions of section 50 of the Income Tax Act, 1961 as section 50 being special provision for computation of capital gain could not be determinative for allowance of depreciation?" 3. Brief facts of the appeal are as under: 3.1 The respondent-assessee is a public sector undertaking established to implement the Micro-Irriga....
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....f Gujarat constitute the income of the assessee as per provisions of Section 11(2). The Tribunal has sought to rely upon the judgment of this Court given in case of Gujarat Municipal Finance Board Vs. DCIT (Assessment) reported in (1996) 221 ITR 317. Relying on the said judgment from the record that, it can be discerned that the grant was made available to the assessee- respondent by the State Government for the purpose of implementing the earthquake reconstruction and rehabilitation. It further gets revealed that the same was directed to be kept in a separate bank account with the specific directions that the amount of interest is deposited with the State Government in the consolidated fund as the amount given to the State Government by World Bank and ADR includes 30% grant and 70% loan to be repaid by the State Government at the rate of 12% of interest. Tribunal observed that the grants are made by the State Government out of the fund received from the World Bank, Asian Development Bank (ADB), Govt. of India, United Nations Development Programme, Japan Fund for Poverty Reduction and also from other Central and State Government Agencies. It further observed that this grants were p....
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....sequently the additions made by the Assessing Officer is deleted, we are of the view that the impugned judgment and order passed by the ITAT is not required to be interfered with." 8. In view of the above decisions of this Court, no question of law arise for consideration of this Court. 9. So far as Question (b) is concerned, for deletion of addition of interest on unspent grant, the same is also held in favour of the assessee by this Court in case of Commissioner of Income Tax v. Gujarat Informatics Ltd, reported in [2013] 36 taxmann.com 272 (Gujarat), as under: "11. In the facts and circumstances of the case as can be noted from the record, the assessee needed to pay the specified amount of expenditure, being the interest amount, at the rate of 6%, to be paid to the Department of the science and Technology. The liability was necessarily ascertained for having come in a package, given to the assessee while disbursing the amount/grant as also by way of both government resolutions as discussed elaborately by both the CIT(A) and the Tribunal and, therefore, by no stretch of imagination it can be said that there was uncertain or undetermined liability. The assessee-Comp....
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....e aforesaid view adopted by the first appellate authority and confirmed by the Tribunal. In fact the assessment order itself reveals that it is not the case of the Assessing Officer that the assets were not put to use at all. Once the factory building is put to use it is not possible to restrict the depreciation on the said building by stating that only a portion thereof has been put to use. Similarly, in relation to the block of assets, it is not possible to segregate items falling within the block for the purposes of granting depreciation or restricting the claim thereof. Once it is found that the assets are used for business, it is not necessary that all the items falling within plant and machinery have to be simultaneously used for being entitled to depreciation." 11. The aforesaid decision of Sonal Gum Industries (Supra) is also referred to, relied upon and applied by this Court in case of Nirma Credit & Capital Ltd. v. Assistant Commissioner of Income Tax, reported in [2017] 390 ITR 302 (Gujarat), as under: "5. Learned counsel appearing on behalf of the assessee submitted that the authorities below as also the Tribunal did not allow deduction mainly on the ground ....