ACIT CORPORATE CIRCLE 1 (1), CHENNAI vs. M/S ABI SHOWATECH INDIA LTD, CHENNAI

आदेश/ O R D E R

PER S. JAYARAMAN, ACCOUNTANT MEMBER:

:- 2 -: & 481/Chny/2018 2. M/s. ABI Showatech India Ltd., the assessee, is engaged in the business of manufacture of parts and accessories of Motor Vehicles and parts of Turbo charger. While making the assessments for assessment years 2013-14 & 2014-15, the Assessing Officer noticed, inter alia, that the assessee admitted dividend income from shares and mutual funds and claimed them as an exempt income u/s. 10, towards which it disallowed Rs. 6,04,162/- and Rs. 7,97,474/-, respectively, as an expenditure in relation to such income. While arriving the same, the assessee has not considered the investments shown under the head “trade investments” which is also a source of dividend income.

In view of that the Assessing Officer invoked the provisions of section 14A r.w.r. 8D, re-worked the disallowances from which he reduced the amount already disallowed by the assessee and added the balance in the respective assessments. Further, the AO noticed that the assessee has claimed additional depreciation @ 10% (50% of 20%), in respect of additions made to plant and machinery acquired in the second half of the preceding assessment years i.e., in assessment years 2012-13 & 2013-14, respectively. Since, the additions to fixed assets made in second half of those assessment years, for the balance 50% of the additions made to the plant and machinery, the assessee claimed the additional depreciation in the subsequent assessment years viz., assessment years 2013-14 & 2014-15, respectively. The AO did not accept such claim and made disallowances. Aggrieved, the assessee filed appeals against those orders before the Ld. CIT(A).

:- 3 -: & 481/Chny/2018

“1. The order of the learned CIT(A) is contrary to law, facts and circumstances of the case. 2.1 The learned CIT(A) erred in restricting the disallowance made of Rs.13.09 lakhs u/s.14A R.w.Rule 8D by directing the AO to exclude the investment which do not yield income while computing the disallowance 2.2 The learned CIT(A) erred in holding that the investments which do not yield exempt income have to be reduced while computing the disallowance under limb (iii) of the Rule 8D, without appreciating the fact that the entire investments are capable of earning exempt income, and further Rule SD does not provide for such exclusion 3.1 The learned CIT(A) erred in deleting the disallowance of Rs.2.37 crores claimed towards additional depreciation u/s.32(1)(iia) of the Act 3.2 The learned CIT(A) erred in deleting the disallowance of balance of additional depreciation claimed u/s.32(1)(iia) which was not utilized in the earlier year as no such provisions exist in the said section for carrying forward the unutilized portion of the additional depreciation of the earlier year.

:- 4 -: & 481/Chny/2018 3.3 The learned CIT(A) failed to appreciate that the benefit of such carry forward of unutilized additional depreciation is available to the assessee only w.e.f. 1.4.2016 and not for the impugned AY 2013-14 4.1 For these and other grounds that may be adduced at the time of hearing, it is prayed that the order of the learned CIT(A) may be set aside and that of the Assessing Officer restored.”

6. We heard the rival submissions and perused the relevant material. The special bench of the Delhi Tribunal in the case of ACIT vs Vireet Investments (P) Ltd., supra, after considering due submissions of the Revenue and various judgements has held that only those investments which yielded exempt income during the year alone should be considered for computing the average value of investments in para 11.16 of the order, supra. Since, the impugned assessment orders do not reveal as to whether such investments were considered or not, the Ld. CIT(A), following the special bench decision has directed the AO to compute the disallowance u/s. 14A in accordance with that decision, of which we do not find any reason to interfere and hence the Revenue’s appeals on this issue are dismissed for assessment years 2013-14 & 2014-15, respectively.

:- 5 -: & 481/Chny/2018 6.1 With regard to the additional depreciation claim, since the Ld. CIT(A) applied the ratio of the Jurisdictional High Court decisions viz., Jurisdictional Brakes India Ltd vs DCIT in TCA No.551 of 2013, assessee’s own case in TCA Nos. 699 to 702 of 2013 dated 14.03.2017 and CIT vs T.P. Textiles (P) Ltd. (2017) 79 Taxman.com 411 (Mad)/ 394 ITR 483, supra, we do not find any reason to interfere with the orders of the Ld. CIT(A). Thus, all the grounds of the Revenue’s appeals for assessment years 2013-14 & 2014-15 are dismissed.

Order pronounced on Tuesday, the 09th day of October, 2018 at Chennai.