DCIT, LARGE TAXPAYER UNIT-1, CHENNAI vs. WHEELS INDIA LTD, CHENNAI

PDF · subscribers
ITA 2198/CHNY/2017Status: DisposedITAT Chennai24 April 2018AY 2011-124 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal upheld the CIT(A)'s decision, agreeing that additional depreciation was allowable based on the High Court's ratio. It also confirmed the CIT(A)'s view on UPS being part of computer hardware and the allowability of weighted deduction for R&D expenses.

What were the facts?

The Revenue appealed against the CIT(A)'s order concerning additional depreciation on plant and machinery, depreciation on UPS, and weighted deduction for R&D unit expenses. The Assessing Officer had disallowed these claims.

What were the issues?

Whether additional depreciation is allowable on plant and machinery added in the second half of the preceding year, and the classification of UPS for depreciation purposes.

Which sections of the Income-tax Act were involved?

Section 35(2AB),Section 43B

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(2)Show list

Detected automatically from the text. Citations are also linked where they appear in the judgment. The count shows how many other judgments on BharatTax rely on the same authority.

Income Tax Appellate Tribunal, “A” BENCH, CHENNAI

Before: SHRI DUVVURU RL REDDY & SHRI S. JAYARAMAN

For Respondent: Shri. R. Sindhuja, Advocate
Hearing: 25.01.2018Pronounced: 24.04.2018

आदेश /O R D E R

PER S. JAYARAMAN, ACCOUNTANT MEMBER:

1.

The Revenue filed this appeal against the order of Commissioner of Income Tax (Appeals)-17, LTU, Chennai in dated 08.06.2017 for assessment year 2011-12.

2.

While making the assessment for assessment year 2011-12, in the assessee’s case, i.e., Wheels India Ltd., the Assessing Officer, inter alia, noted that the assessee has claimed additional depreciation during the year @ 10% (50% of 20%) in respect of the additions made to plant and machinery in the second half of the preceding assessment year i.e.., in assessment year 2010-

11.

Since , the additions to fixed assets were made in the second half of that assessment year, for the balance 50% of additional depreciation, the assessee claimed during this assessment year. The AO did not accept the claim.

Further, he found that the assessee had claimed depreciation @ 60% on the value of UPS (uninterrupted power supply system). The AO held that since the UPS is not a data processing equipment, he treated UPS as a plant and machinery and allowed depreciation @ 15%. The assessee claimed Leave Encashment Provision relating to the R & D unit eligible for weighted deduction u/s. 35(2AB). The AO refused it u/s. 43B(F).

3.

Aggrieved, the assessee filed an appeal before the CIT(A). On the issue of additional depreciation, though this ITAT in & 396/Mds/2014 dated 26.09.2014 for assessment year 2010-11 had decided this issue against the assessee , the CIT(A) after considering this ITAT decision in other cases and applying ratio of the Madras High Court decision in the case of Brakes India Pvt. Ltd., Padi vs DCIT, LTU in TCA No. 551 of 2013 dated 14.03.2017 allowed the assessee’s plea. In respect of disallowance towards depreciation on UPS, the CIT(A) following this tribunal decision in ITA No 396/Mds/2014 dated 26.09.2014 in the assessee’s case for assessment year 2010-11 and the Delhi High Court decision in the case of CIT vs Orient Ceramics & Industries Ltd 56 DTR 397 (Del), allowed the assessee’s plea holding that UPS should be treated as part of computer hardware. On the disallowance of weighted deduction claimed u/s. 35(2AB), but disallowed 43B, related to R & D unit, the CIT(A) relying on High Court of Calcutta in 292 ITR 470 and this tribunal decisions in the case of IOB vs DCIT in ITA No 1815/Mds/2011 dated 02.04.2013 and in the assessee’s case in ITA no 379/Mds/2014 dated 26.09.2014 for assessment year 2007-08 allowed the assessee’s plea. Aggrieved, the Revenue filed this appeal.

4.

We heard the rival submissions and gone through the relevant orders.

On the issue of additional depreciation, since the CIT(A) has applied the ratio of the Jurisdictional High Court, we do not find any reason to interfere with her order on that issue. On the issue of disallowance of depreciation on UPS, since the CIT(A) followed the decision of this tribunal in the assessee’s own case, her order on that issue requires no interference. On the issue of disallowance of weighted deduction on expenditure disallowed 43B related to R & D unit also, the CIT(A) followed the decision of this tribunal in the assessee’s own case, we do not find any reason to interfere with the order of :-4-: CIT(A) on this issue. Thus, all the grounds of the Revenue appeals are dismissed.

5.

In the result, the Revenue’s appeal is dismissed.

Order pronounced on Tuesday, the 24th day of April, 2018 at Chennai.

More judgments on Section 35(2AB)

All 842 judgments and leading authorities on Section 35(2AB) →

Recent GST High Court judgments

Search GST case law →