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Income Tax Appellate Tribunal, ‘’ C’’ BENCH, AHMEDABAD
Before: SHRI WASEEM AHMED
(Applicant) (Respondent) Assessee by : Shri Vartik Choksi, A.R Revenue by : Shri L.P. Jain, Sr.D.R सुनवाई क� तारीख/Date of Hearing : 20/04/2021 घोषणा क� तारीख /Date of Pronouncement: 25/06/2021 आदेश/O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER:
The captioned cross appeals have been filed at the instance of the Assessee and the Revenue against the order of the Learned Commissioner of Income Tax (Appeals)-1, Ahmedabad, dated 31/08/2017 arising in the matter of assessment & 2466/AHD/2017 Asstt. Year 2014-15 2 order passed under s. 143(3) of the Income Tax Act, 1961 (here-in-after referred to as "the Act") relevant to the Assessment Year 2014-2015.
First we take appeal filed by the assessee bearing A.Y. 2014-15 for the purpose of adjudication. The assessee has raised the following grounds of appeal:
1. On the facts and in the circumstances of the case, the learned C.I.T.(Appeals) erred in confirming disallowance of Rs.26,20,068/- from out of total disallowance of Rs.43,53,852/- made by the Assessing Officer u/s.36(1)(iii) of the I.T. Act from out of interest expenditure on the ground that the appellant-company advanced interest-free loans to four different companies.
2. On the facts and in the circumstances of the case, the learned C.I.T. (Appeals) erred in confirming disallowance u/s.14A/Rule 8D to the extent of Rs.2,33,39,555 from out of total disallowance of Rs. 7,54,55,263/- made by the Assessing Officer. 3. On the facts and in the circumstances of the case, the learned C.I.T. (Appeals) erred in not recording any findings on the merits of addition u.s,14A of the I.T Act read with Rule 8D of the I.T. Rules made by the Assessing Officer while computing books profit u/s.115JB of the I.T Act by observing that in view of the relief allowed by the learned CIT(A) in quantum appeal, this ground becomes infructuous. 4. The appellant craves leave to add, alter, amend and/or withdraw any ground of appeal either before or during the course of hearing of the appeal.
3. The 1st issue raised by the assessee is that the learned CIT (A) erred in confirming the order of the AO in part by sustaining the addition of ₹ 26,20,068/- on account of interest attributable to the interest free loans and advances.
The facts in brief are that the assessee in the present case is a private limited company and engaged in the business of Mercerizing of Fabrics. The AO during the assessment proceedings found that the assessee on one hand has claimed interest expenses in its financial statement amounting to ₹ 13,80,16,826/- on the money borrowed and on the other hand it has advanced interest free loans & advances amounting to ₹ 3,62,68,100/- to the following parties : Name of the party Amount of loan (₹) Dhawalgiri Properties Pvt. Ltd. 95,50,000/- & 2466/AHD/2017 Asstt. Year 2014-15 3
Elate Investment & Holding Pvt. Ltd. 83,15,700/- Disha Infin Advisor Pvt. Ltd. 14,000/- Kamal Tea Processors Pvt. Ltd. 1,84,02,400/- Total 3,62,82,100/- 4.1 Accordingly, the AO proposed to make the disallowance of the interest expenses attributable to the interest free loans and advances granted by the assessee. The assessee in response claimed that the loans have been granted to the parties for business expediency. Similarly, these loans were provided in the earlier year except a sum of ₹ 14,000/- provided as interest-free loan in the year under consideration. Likewise, the assessee also submitted that there was available sufficient interest-free funds amounting to ₹ 8,99,31,463/- as on 31st March 2014 with it. Thus the assessee contended that there cannot be any disallowance on account of interest expenses attributable to such interest-free loan and advances.
4.2 However, the AO disregarded the contention of the assessee by observing that there being no business transaction of whatsoever was shown by the assessee with the impugned parties.
4.2 Likewise, the AO also noted that the own fund of the assessee consists of ₹ 8,39,38,000/- towards the share premium which cannot be attributed to the owned funds of it. Accordingly the AO worked out the proportionate amount of interest to the tune of ₹ 43,53,852/- being @ 12% of such interest-free loan and advances of ₹ 3,62,82,100/- and held that the borrowed fund has been diverted by the assessee. Therefore, the interest for ₹ 43,53,852/- has not been incurred in the course of the business which was finally added to the total income of the assessee.
Aggrieved assessee preferred an appeal to the learned CIT (A). & 2466/AHD/2017 Asstt. Year 2014-15 4 5.1 The assessee before the learned CIT (A) contended that the above parties to whom the loans and advances provided were its sister concern and the same was provided for the expansion of the business. Similarly, it is also not necessary that there should be business transactions in the very particular assessment year with parties to whom interest free loans and advances were granted. In practical situations, there may be state of affairs that the business transaction commences in the later years. Therefore, it cannot be concluded that the loans were not given for the purpose of the business expediency.
5.2 The assessee also repeated its contentions by stating that its own funds exceeds the amount of interest free loans and advances granted to the parties.
5.3 The assessee alternatively also submitted that there was a specific purpose loan taken from Exim Bank and SBI on which it incurred interest expenses of Rs. 1,22,02,070/- which has to be used only for the specific purpose. In other words, such amount of loan cannot be diverted for non-commercial purposes. Likewise, the assessee has earned interest income as well for Rs. 3,00,30,350/- in the year under consideration. Accordingly it was claimed that the interest on such specific loan and the interest income should be given the benefit for making the disallowance of interest expenses. As per the assessee, the amount of interest which needs to be disallowed after considering the interest on the specific loan as well as interest income, stands at Rs. 26,20,068/- which is attributable to the interest free loan advances.
5.4 However, the learned CIT (A) following his predecessor order in own case of assessee for A.Y. 2008-09 to 2013-14 held that the amount of interest free fund claimed by the assessee is consisting of share application money of Rs. 2.2 crores and share premium of 7.39 crores cannot be considered as owned fund of the assessee. & 2466/AHD/2017 Asstt. Year 2014-15 5 5.5 Nevertheless, the learned CIT (A) was pleased to entertain the alternate contention of the assessee and accordingly concluded that the addition with respect to the interest free loans and advances should be limited to the extent of ₹ 26,20,068/- and the remaining amount of ₹ 17,33,784/- should be deleted but after necessary verification. Thus the learned CIT (A) allowed the appeal of the assessee in part.
5.6 Being aggrieved by the order of the learned CIT (A), both the assessee and the revenue are in appeal before us. The assessee is in appeal against the confirmation of the addition for ₹ 26,20,068/- whereas the Revenue was in appeal against the deletion of the addition made by the AO for ₹ 17,33,784/-. The ground of appeal of the revenue in stands as under:
That the ld.CIT(A) has erred in law and on facts in deleting the disallowance of deduction of Rs.17,33,784/- (out of interest expense debited to the appellant’s Profit & Loss Account).
6. The learned AR before us contended that the learned CIT (A) in the immediate preceding assessment year confirmed the addition for an amount of ₹12 lakhs only. Accordingly, the learned AR before us submitted that the addition should be limited to ₹12 lakhs only as the facts of the year under consideration are identical to the immediate preceding assessment year i.e. 2013-14. The learned AR in support of his contention drew our attention on pages 56 to 101 of the paper book where the order of the learned CIT (A) for the assessment year 2013-14 was placed and especially drew attention to page 88 where finding of the learned CIT (A) placed in this regard.
On the other hand the learned DR submitted that the amount of interest attributable to the amount diverted for nonbusiness purposes should be sustained.
7.1 Both the learned AR and the DR before us vehemently supported the order of the authorities below to the extent favourable to them. & 2466/AHD/2017 Asstt. Year 2014-15 6
We have heard the rival contentions of both the parties and perused the materials available on record. From the preceding discussion we note that the issue on hand relating to the disallowance of interest on the interest-free loans and advances granted by the assessee has been arising right from the assessment year 2008-09 to 2013-14. The relevant finding of the learned CIT (A) reads as under: 2.3 I have carefully considered the Assessment Order and submission filed by the Appellant. The Ao has made interest disallowance on advances given to three parties on the ground that interest bearing funds have been utilized for granting interest-free advances. Similar disallowances are made in the case of Appellant since A.Y 2008-09 to 2013-14 wherein disallowance was restricted on proportionate basis. Similar issue was dealt by undersigned in AY 2013-14 vode order dated 27th April 2017 as under.
8.1 The stand taken by the learned CIT (A) for calculating the amount of interest attributable for the assessment year 2011-12 was challenged by the Revenue in which was dismissed by the ITAT vide order dated 11th March 2019. The relevant extract of the order of the ITAT reads as under:
In this ground, ld.A.O contended that interest free loans have been made out of interest bearing funds towards which interest expense have been paid @ rate from 12% to 16%. Accordingly, A.O held that 15% of interest on the advances shall be disallowed and further observed that since interest bearing funds have been diverted for non business purpose as follows: Particulars Amount as on 31/03/2011 Amount as on 31/03/2010 Dhawalgiri Properties P. Ltd. 9550000 9550000 Elate Investments & Holdings 8315700 8315700 Pvt. Ltd. Kamal Tea Processors P. Ltd. 18402400 18402400 Jayesh K Shah 61900000 0 Total 9,81,68,100 3,62,68,100 11. On the other hand, assessee contention was that it had sufficient interest free funds in form of share capital, share application money and reserve and surplus. Hence, proportionate interest disallowance cannot be made. 12. Thereafter, assessee preferred first statutory appeal before the ld.CIT(A) who granted relief to the assessee. 13. We have gone through the relevant record and impugned order. It is observed from the impugned order wherein in earlier assessment year 2008-09 and 2010-11 wherein ld.CIT(A) has restricted disallowance of interest expenditure of Rs.2038124/- out of total disallowance of Rs.14725215/- u/s.36(1)(iii) and accordingly assessee got relief of Rs.12687091/- 14. After going through the impugned order, we are of the considered opinion, that ld.CIT(A) has passed detailed and reasoned order and same does not require any kind of interference at our end. Therefore same is dismissed.
& 2466/AHD/2017 Asstt. Year 2014-15 7 8.2 It also appears that there was no cross appeal filed by the assessee for the assessment year 2011-12. Our view is based on the order of the ITAT bearing in the appeal filed by the Revenue as there was no cross appeal of the assessee. Generally, cross appeals of any particular year i.e. by the assessee and by the revenue are heard together. Accordingly, it seems from the records available before us there was no appeal preferred by the assessee for the assessment year 2011-12. Thus, it can be safely concluded that the issue on hand is covered by the order of the ITAT as discussed above in the own case of the assessee.
8.3 It is also important to note that the learned AR before us at the time of hearing conceded to uphold the finding of the learned CIT (A) for the year under consideration. In view of the above facts, the ground of appeal of the assessee is dismissed and the ground of appeal of the revenue is also dismissed.
9. The 2nd issue raised by the assessee is that the learned CIT (A) erred in confirming the order of the AO in part by sustaining the disallowance of Rs. 2,33,39,555/- under the provisions of section 14A read with rule 8D of the Act.
10. The AO in the assessment proceedings found that the assessee has made investments amounting to Rs. 130,53,18,349/- which are capable of generating exempted income. Accordingly the AO invoked the provisions of section 14A read with rule 8D of Income Tax Rule and made the disallowance of Rs. 7,54,66,263/- being Rs. 7,18,99,489/- on account of interest expenses and Rs. 35,66,773 on account of administrative expenses.
Aggrieved assessee preferred an appeal to the learned CIT (A) who restricted the addition to the extent of Rs. 2,33,39,555/- being total exempted income earned during the year under consideration. Thus the ground of appeal of the assessee was allowed in part. & 2466/AHD/2017 Asstt. Year 2014-15 8
Being aggrieved by the order of the learned CIT (A), both the assessee and Revenue are in appeal is in appeal before us. The assessee is in appeal against the confirmation of the addition amounting to Rs. 2,33,39,555/- whereas the Revenue is in appeal against the deletion of the addition amounting to Rs. 5,21,26,708/-. The ground raised by the revenue in reads as under:
2. That the ld.CIT(A) has erred in law and on facts in deleting the disallowance of Rs.5,21,26,708/- made u/s.14A of the I.T. Act.
The learned AR before us contended that the amount of disallowance under section 14A read with rule 8D should be worked out after considering only those investments which have yielded the exempted income.
The learned AR further submitted that the assessee is receiving 2 kinds of income on account of the investment made in a partnership firm i.e. share of profit which is exempted in its hands under section 10(2A) of the Act and amount of interest which is chargeable to tax under section 28 of the Act in its hands. As the assessee received exempted as well as taxable income from the partnership firm, whereas the provisions of section 14A read with rule 8D are applicable only to the exempted income only, therefore there should not be any disallowance with respect to the exempted income earned by the assessee from the partnership firm. The learned AR further contended that the ITAT in the own case of the assessee has decided the identical issue for the assessment year 2011-12 in vide order dated 11th March 2019 in favour of the assessee.
On the other hand, the learned DR contended that the assessee is in receipt of exempted income from the partnership firm and therefore the disallowance needs to made under the provisions of section 14A read with rule 8D of Income Tax Rule.
Both the learned AR and DR before us vehemently supported the order of the authorities below to the extent favourable to them. & 2466/AHD/2017 Asstt. Year 2014-15 9
We have heard the rival contentions of both the parties and perused the materials available on record. There is no ambiguity to the fact that while making the disallowance under the provisions of section 14A read with rule 8D, the investments which have yielded the exempted income should only be considered for the purpose of the disallowance. In this connection, we draw support and guidance from the judgment of the Co-ordinate bench of this tribunal in the case of Gateway Technolabs (P) Ltd. vs. DCIT reported in 100 taxmann.com 147 where it was held as under: Expenditure incurred in relation to exempt income not includible in total income (General) - Whether for purpose of computing administrative expenses to be disallowed under section 14A, read with rule 8D, only such investments are to be taken into account which yield tax exempt income - Held, yes [Paras 14 and 16] [In favour of assessee] 17.1 However on perusal of the facts available on record, we find that the assessee has received exempted income only from the partnership firm amounting to Rs. 2,33,39,555/- besides the interest income of Rs. 1,66,35,014/- from such partnership firm. Admittedly, the assessee is receiving both taxable as well as exempted income from the partnership firm. Thus the controversy arises whether the provisions of section 14A read with rule 8D can be invoked with respect to the exempted income being share of profit received from the partnership firm. This question has been answered by the ITAT in the own case of the assessee bearing the relevant extract of the order of the ITAT reads as under: The assessee has made investment of Rs.77665000/- in a LLP, being assessee contribution to the capital of Limited Liability partnership (LLP) in question was bound to produce every year and it had indeed produced this year taxable in case by way interest from LLP. And on such income disallowance u/s. 14A cannot be made as investment in firms have resulted into taxable income. Therefore, in our considered opinion, ld.CIT9A) has rightly granted relied to the assessee and same does not require any kind of interference at out end. Thus, this ground of the appeal of the Revenue is dismissed.
17.2 Before us, no material has been placed on record by the Revenue to demonstrate that the decisions of Tribunal as discussed aforesaid has been set aside / stayed or overruled by the higher Judicial Authorities. Likewise, the Revenue before us has not placed any material on record to point out any distinguishing & 2466/AHD/2017 Asstt. Year 2014-15 10 feature in the facts of the case for the year under consideration and that of earlier year nor has placed any contrary binding decision in its support.
17.3 In view of the above, there remains no ambiguity that there cannot be any disallowance under the provisions of section 14A read with rule 8D with respect to the exempted income being share of profit received from the partnership firm. Hence the ground of appeal of the assessee is allowed whereas the ground of appeal of the Revenue is dismissed.
18. The next issue raised by the assessee is that the learned CIT (A) erred in confirming the disallowance made by the AO in part for ₹ 2,33,39,555 while computing the profit under the provisions of section 115 JB of the Act.
19. The AO while determining the income under normal computation has made the disallowance under the provisions of section 14A read with rule 8D amounting to Rs. 7,54,66,263/- which was added to the total income of the assessee. Likewise, the AO has also made the addition of the similar amount under clause (f) of explanation-1 to section 115JB of the Act, while determining the book profit.
20. Aggrieved assessee preferred an appeal to the learned CIT (A) who has restricted the addition under clause (f) of explanation-1 to section 115JB of the Act to the extent of exempted income.
Being aggrieved, by the order of the learned CIT (A) the assessee is in appeal before us.
The learned AR before us contended that the amount of disallowance made under section 14A read with rule 8D cannot be considered for determining the book profit under section 115JB of the Act. & 2466/AHD/2017 Asstt. Year 2014-15 11
The learned AR alternatively contended that 1% of the exempted income can be disallowed while computing the book profit under section 115JB of the Act.
23.1 On the other hand the learned DR vehemently supported the order of the authorities below.
We have heard the rival contentions of both the parties and perused the materials available on record. The AO in the instant case has made the disallowance under section 14A r.w.r. 8D of the Income Tax Rules for Rs. 7,54,66,263/- while determining the income under normal computation of income. Further, the AO while determining the book profit under Minimum Alternate Tax (MAT) as per the provisions of section 115JB of the Act, has added the disallowance made under the normal computation of Income under section 14A r.w.r. 8D of Income Tax Rule for Rs. 7,54,66,263/- in pursuance to the clause (f) of explanation 1 to section 115JB of the Act which was restricted to Rs. 2,33,39,555/- by the learned CIT (A) to the extent of exempted income.
24.1 However, we note that in the recent judgment of Special Bench of Hon’ble Delhi Tribunal in the case of ACIT vs. Vireet Investment Pvt. Ltd. reported in 82 Taxmann.com 415 has held that the disallowances made u/s 14A r.w.r. 8D cannot be the subject matter of disallowances while determining the book profit u/s 115JB of the Act. The relevant portion of the said order is reproduced below:
“In view of above discussion, the computation under clause (f) of Explanation 1 to section 115JB(2), is to be made without resorting to the computation as contemplated under section 14A, read with rule 8D of the Income-tax Rules, 1962.” 24.2 The ratio laid down by the Hon’ble Tribunal is squarely applicable to the facts of the case on hand. Thus it can be concluded that the disallowance made under section 14A r.w.r. 8D cannot be resorted while determining the expenses as mentioned under clause (f) to explanation 1 to section 115JB of the Act.
& 2466/AHD/2017 Asstt. Year 2014-15 12 24.3 However, it is also important to note that the disallowance needs to be made with respect to the exempted income in terms of the provisions of clause (f) to section 115JB of the Act while determining the book profit. In holding so, we draw support from the judgment of Hon’ble Calcutta High Court in the case of CIT Vs. Jayshree Tea Industries Ltd. in GO No.1501 of 2014 (ITAT No.47 of 2014) dated 19.11.14 wherein it was held that the disallowance regarding the exempted income needs to be made as per the clause (f) to Explanation-1 of Sec. 115JB of the Act independently. The relevant extract of the judgment is reproduced below:- “We find computation of the amount of expenditure relatable to exempted income of the assessee must be made since the assessee has not claimed such expenditure to be Nil. Such computation must be made by applying clause (f) of Explanation 1 under section 115JB of the Act. We remand the matter for such computation to be made by the learned Tribunal. We accept the submission of Mr. Khaitan, learned Senior Advocate that the provision of section 115JB in the matter of computation is a complete code in itself and resort need not and cannot be made to section 14A of the Act.” 24.4 Given above, we hold that the disallowances made under the provisions of Sec. 14A r.w.r. 8D of the IT Rules, cannot be applied to the provision of Sec. 115JB of the Act as per the direction of the Hon'ble Calcutta High Court in the case of CIT Vs. Jayshree Tea Industries Ltd. (Supra).
24.5 Now the question arises how to determine the disallowance as per the clause (f) to Explanation-1 of Sec. 115JB of the Act independently. In this regard, we note that there is no mechanism/ manner given under the clause (f) to Explanation-1 of Sec. 115JB of the Act to workout/ determine the expenses with respect to the exempted income. Therefore in the given facts & circumstances, we feel that ad- hoc disallowance will serve the justice to the Revenue and assessee to avoid the multiplicity of the proceedings and unnecessary litigation. Thus we direct the AO to make the disallowance of 1% of the exempted income as discussed above under clause (f) to Explanation-1 of Sec. 115JB of the Act. We also feel necessary to bring this fact on record that we have restored other cases involving identical issues to the file of AO for making the disallowance as per the clause (f) to Explanation-1 of Sec. 115JB of the Act independently. But now we find that there is no mechanism provided under the clause (f) to Explanation-1 of Sec. 115JB of the Act to make the & 2466/AHD/2017 Asstt. Year 2014-15 13 disallowance independently. Therefore our action for restoring back the issue to the file of AO would unnecessarily cause further litigation. Thus we limit the disallowance on an ad-hoc basis @ 1 % of the exempted income as per the clause (f) to Explanation-1 of Sec. 115JB of the Act. Thus the ground of appeal of the assessee is partly allowed.
24.6 In the result the appeal filed by the assessee is partly allowed.
Coming to the an appeal by the revenue.
The Revenue has raised following ground of appeal:
1. That the ld.CIT(A) has erred in law and on facts in deleting the disallowance of deduction of Rs.17,33,784/- (out of interest expense debited to the appellant’s Profit & Loss Account).
2. That the ld.CIT(A) has erred in law and on facts in deleting the disallowance of Rs.5,21,26,708/- made u/s.14A of the I.T. Act.
3. That the ld.CIT(A) has erred in law and on facts in deleting the disallowance made on account of additional depreication amounting to Rs.44,857/- on certain items of plant and machinery.
4. The appellant craves, to leave, to amend and/or to alter any ground or add a new ground which may be necessary.
26. The 1st issue raised by the revenue is that the learned CIT (A) erred in deleting the addition made by the AO amounting to ₹ 17,33,784/- only on account of interest attributable on interest free loans and advances.
At the outset we note that the issue raised by the revenue has already been adjudicated along with the ground of appeal bearing Ground no-1 in the appeal filed by the assessee. The ground raised by the revenue was dismissed by us vide paragraph number 8 of this order. For the detailed discussion, please refer the relevant paragraph. Accordingly, we dismiss the ground of appeal raised by the revenue. & 2466/AHD/2017 Asstt. Year 2014-15 14
28. The 2nd issue raised by the revenue is that the learned CIT (A) erred in deleting the addition made by the AO for ₹ 5,21,26,708/- under the provisions of section 14A read with rule 8D of Income Tax Rules.
At the outset we note that the issue raised by the Revenue has already been adjudicated along with the ground of appeal bearing ground number-2 in the appeal filed by the assessee. The ground raised by the revenue was dismissed by us vide paragraph number 17 of this order. For the detailed discussion, please refer the relevant paragraph. Accordingly, we dismiss the ground of appeal raised by the revenue.
30. The last issue raised by the revenue is that learned CIT (A) erred in deleting the disallowances made by the AO for ₹ 44,857/- being the additional depreciation claimed by the assessee.
31. The AO during the assessment proceedings found that the assessee has claimed additional depreciation on the fixed assets being cooler and vacuum cleaner. As per the AO these fixed assets were not eligible to produce any article or thing for the purpose of the business. Accordingly the AO disallowed the additional depreciation claimed by the assessee amounting to ₹ 44,857/- and added to the total income of the assessee.
32. Aggrieved assessee preferred an appeal to the learned CIT (A) who deleted the addition made by the AO by observing as under: 4.3 / have carefully considered the Assessment Order and submission filed by the Appellant. The brief facts of the case are that Appellant has claimed additional depreciation on AC gear machine, Storage Tank etc purchased during the year and it is claim of Appellant that such assets are used in business of manufacture or production of articles, it has claimed additional depreciation. However, this claim of Appellant was rejected by AO on the ground that such assets have not produced any article or thing for the purpose of business. On the other hand Appellant has relied upon submission filed before AO and contended that there is no requirement that particular item of plant and machinery should itself be manufacturing or producing article or thing. It is observed that similar issue was decided in favour of appellant in A.Y. 2012-13 vide appellate order dated 27/04/2017 as under "On careful consideration of entire facts along with provisions of Section 32(iia) of the Act, it is observed that Assessee is entitled for higher depreciation if it acquires & 2466/AHD/2017 Asstt. Year 2014-15 15
any new machinery or plant and Assessee should be engaged in the business of manufacture or production of article. The proviso to said section categorically excludes certain assets on which additional depreciation cannot be allowed. The Appellant has purchased cooler and vacuum cleaner and claimed that such assets are used for the purpose of manufacturing and such fact is not denied by AO in Assessment Order. The provisions nowhere state that additional depreciation should not be allowed if any plant and machinery has not produced any article or thing or such article or thing, if not capable of converting goods into sale, additional depreciation would not be allowed. The claim of Appellant regarding additional depreciation is within the framework of law hence for the reasons stated herein addition made by AO for Rs. 32.132/- is deleted. This Ground of Appeal is allowed'.
Considering the above referred observation, claim of appellant for additional depreciation of Rs.44,857/- in current assessment year is allowed and disallowance made by Assessing Officer is deleted. This ground of appeal is partly allowed.
Being aggrieved by the order of the learned CIT (A) the revenue is in appeal before us.
Both the learned DR and AR before us vehemently supported the order of the authorities below to the extent favourable to them.
We have heard the rival contentions of both the parties and perused the materials available on record. At the outset we note that the identical issue has been decided by this tribunal in the own case of the assessee in its favour in vide order dated 11th March 2019, the relevant extract of the order is reproduced as below: 3. Assessee is in the business of leasing activity and is earning income from leasing business and claimed additional depreciation on things and article which have been lesased out by the assessee. But ld. A.O was not agree with the contention of the assessee on the ground that assessee has not used machinery or plant for production and manufacturing or article or things and disallowed the claim of additional depreciation. 4. Thereafter, assessee preferred first statutory appeal before the ld.CIT9A) who allowed the claim of the assessee. 5. We have gone through the relevant record and impugned order. In support of its contention, ld.AR contended that asssessee is entitled for additional depreciation and cited an order of Madras High Court in the matter of Titanium Equipment and Anode Manufacturing Company Ltd. Vs DCIT 278 ITR 565 wherein it is held that lessor is entitled to extra shift and additional depreciation allowance on the assets leased out. And Hon’ble High Court drawn support from the order of the Supreme Court in the matter of CIT vs. Maharashtra Apex Corporation Ltd. (2002), 254 ITR 98. & 2466/AHD/2017 Asstt. Year 2014-15 16
Therefore, respectfully following the above said judgment, we allow the claim of the assessee for additional depreciation and dismissed the ground of the appeal of the Revenue.
35.1 The facts of the case on hand are identical to the facts of the case as discussed above, therefore respectfully following the same and to maintain the parity, we do not find any reason to disturb the finding of the learned CIT (A). Thus the AO is directed to delete the addition made by him. Hence the Ground of appeal of the Revenue is dismissed.
35.2 In the result the appeal filed by the revenue is dismissed
In the combined result, appeal filed by the Assessee is partly allowed and the appeal filed by the Revenue is dismissed.
Order pronounced in the Court on 25/06/2021 at Ahmedabad.