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Income Tax Appellate Tribunal, “C” BENCH, MUMBAI
Before: SHRI MAHAVIR SINGH & SHRI RAMIT KOCHAR
Assessee by: Shri. M.C. Naniwadekar Revenue by : Shri. Rajat Mittal सुनवाई की तारीख /Date of Hearing : 16-01-2018 घोषणा की तारीख /Date of Pronouncement : 22 -01-2018 आदेश / O R D E R
PER RAMIT KOCHAR, Accountant Member
This appeal, filed by the assessee, being 2011-12 is directed against the appellate order dated 25.01.2016 passed by learned Commissioner of Income-tax (Appeals)-10, Mumbai (hereinafter called “the CIT(A)”) for assessment year 2011-12, appellate proceedings had arisen before learned CIT(A) from the assessment order dated 10-03-2014 passed by learned Assessing Officer (hereinafter called “the AO”) u/s 143(3) of the Income-tax Act, 1961 (hereinafter called “the Act”).
The grounds of appeal raised by the assessee in the memo of appeal filed with the Income-Tax Appellate Tribunal, Mumbai (hereinafter called “the tribunal”) read as under:- “ On the facts and in the circumstances of the case and in law:
1. The learned Commissioner of Income Tax (Appeals) erred in partially confirming the disallowance u/s. 14A r.w. Rule 8D of the Income Tax Act, 1961 made by the Assessing Officer.
2. The learned Commissioner of Income Tax (Appeals) erred in confirming the disallowance of depreciation of Rs. 10,85,620/- in respect of certain items of plant and machinery without appreciating that the same were installed and put to use during the previous year. The appellant craves leave to add, alter, amend, delete, vary any or all the grounds of appeal.”
3. The brief facts of the case are that assessee is engaged in the business of manufacturing and trading in carburettors and parts thereof for two/three wheelers, stationary engines and other auto components, parts and computer fan assembly. On perusal of the computation of income , the A.O. observed that the assessee has shown an amount of Rs. 8,72,97,131/- as dividend income which was claimed as an exempt income under the provisions of the Act. The assessee was asked as to why disallowance of expenditure incurred in relation to earning of exempt income be not made u/s 14A r.w.r. 8D of the Income-tax Rules, 1962 . The assessee in response submitted that the dividend income is claimed as an exempt income u/s 10(33) of the 1961 Act. It was submitted that the assssee has invested surplus funds in mutual funds and equity shares of listed companies. It was submitted that the Reserve and Surplus of the assessee company as at 31- 03-2011 stood at Rs. 195.72 crores , as against investment of Rs. 161.38 crores as on 31.03.2011 . It was also submitted that no loans were taken for investment purposes and whatever loans were taken were for the use for business purposes and hence no interest expenses can be attributed towards exempt income. The assessee submitted that assessee has availed certain loans which are by way of temporary bank overdraft and even during the period under consideration no such temporary bank overdraft was actually availed by the assessee and no interest thus could be attributable to these temporary overdraft. It was submitted that only 36 dividend warrants were received and deposited in bank accounts. It was also submitted that two persons were working towards these investments and there expenses which need to be disallowed which worked out to Rs. 1,25,000/- which the assessee offered voluntarily to disallow u/s 14A of the 1961 Act towards earning of exempt income.
The A.O rejected contentions of the assessee as the A.O observed that the assessee has failed to show that no expenses were incurred for earning of dividend income. The AO observed that the administrative and other expenses incurred by the assessee company which has facilitated in earning of dividend income cannot be ruled out. It was also observed by the A.O that there are no evidences furnished by the assessee to prove nexus of own funds being utilised for investments. The A.O observed that there are common pool of funds and assessee has failed to prove that no borrowed funds were utilized for the purposes of investments and the A.O made the disallowance by invoking Section 14A r.w.r. 8D of the 1962 Rules as under, vide assessment order dated 10-03-2014 passed by the AO u/s 143(3) of the 1961 Act :-
(A)Expenditure directly relating to income which does not 0 (A) form part of total income (as per Tax Audit Report) Interest Expenses 19,28,058 Opening Value of Investments 1,38,72,90,215 Closing Value of Investments 1,61,38,43,760 Average Value of Investments 15,00,566,988 Opening Value of Total Assets 179,84,49,332 Closing Value of Total Assets . 2,03,15,54,186 Average Value of Total Assets 1,91,50,01,75.9 (B)Interest disallowance as per Rule 8D Interest Expenses X Average Value of Investments (B) 15,10,798 Average value of Total Assets 75,02,835 (C) Disallowance u/s 14A being 05% of Average Value of - (C) Investment Total Disallowance u/s 14A (A+B+C) 90,13,633 Added back to the total income by the assessee 1,25,000 Net disallowance u/s. 14A 88,88,633/-
Aggrieved by the assessment order dated 10-03-2014 passed by the AO u/s 143(3), the assessee carried the matter in appeal before the learned CIT-A, and the assessee submitted as under:- “ 2. The learned DCIT erred in disallowing amount of Rs.90,13, 633/- applying the provisions of sec. 14A r. w. Rule 8D of the I. T. Act, although there was no nexus between the expenditure incurred and exempt income. 3. The learned DCIT has applied rule 80 although there is no finding that he was not satisfied with the correctness of the amount offered by the appellant for disallowance U/s. 14A. 4. The learned DCIT erred in considering expenditure by way of interest in respect of capital borrowed and utilised for the purpose of business of the appellant as utilised for making investments and thereby considering the interest is attributable to earning of exempt income.
5. The learned DCIT erred in treating bank charges of Rs. 10,87,665 incurred in the course of its business by the appellant as related to making investments and thereby considering the same as expenditure by way of interest attributable to earning of exempt income. 6. The learned DCIT erred in computing the average value of investment at Rs.1,50,05,66,988 by including therein Rs.55,60,23,363 being the average value of debt funds with growth option. She to have appreciated that the income from such investments are chargeable to tax and the provisions of section 14A of the act will not apply to such investments. 7. The learned DCIT erred in incorrectly computing the average, value of total assets net of current liabilities.” The learned CIT-A held as under, vide appellate orders dated 25-01-2016:- “ 4.2 I have carefully considered the facts of the case and the submissions of the Ld.AR. I have also gone through the decisions relied on by the AO and the Ld.AR. The AO has made disallowance by invoking limbs (ii) and (iii) of Rule 8D(2). The AO has given opportunity to the appellant to explain the expenditure relatable to exempt income. On being not satisfied with the explanation, the AO had made the disallowance by invoking provisions of s.14A r.w. Rule 8D. 4.2.1. As seen from the facts of the case the appellant has received dividends of Rs.11,60,000 during the year and made a disallowance of Rs. 3,38,200 towards expenditure relatable to earning .of this exempt income. Since the appellant itself has made an ad hoc disallowance of Rs. 3,38,200 admitting incurring of certain expenditure for earning exempt income, the provisions of section 14A becomes operational. Once the provisions of section 14A becomes operational, the disallowance cannot be made in any other way except as per scientific mathematical formula devised under rule 8D especially from assessment year 2008- 09 as per the decision in the case of Godrej & Boyce Mfg. Co.Ltd. Further, the provisions of s.14A(1) are applicable even in the absence of 4
sub-sec (2) and (3) of s.14A and of Rule 8D. The decision in the case of Godrej & Boyce Mfg. Co.Ltd v. DCIT (328 ITR 81) (2010) (Bom.) which has declared that the provisions of s.14A are constitutionally valid and fair and reasonable, that the Rule 8D which has been introduced by a notification of the Board dt.24.3.2008 is applicable from A.Y 08-09, has made it amply clear (para 67) that, "Even in the absence of sub-section (2) and (3) of section 14A and of Rule 8D. The AO was not precluded from making apportionment. Such an apportionment would have to be made in order to give effect to the substantive provisions of sub-sec (1) of s. 14A which provides that no deduction would be allowed in respect of expenditure incurred in relation to income which does not form part of the total income under the Act. Consequently, dehors the provisions of sub-sec (2) and (3) of s. 14A and Rule 8D. The AO was entitled to determine by the application of a reasonable method as to what quantum of the expenditure incurred by the assessee would have to be disallowed on the ground that it was incurred in relation to the earning of income which does not form part of the total income under the Act. " Section 14A(3) itself states that, "The provisions of sub-section (2) shall also apply in relation to a case where the assessee claims that no expenditure has been incurred by him in relation to income which does not form part of the total income under this Act". Which means to say that the provisions of s.14A are applicable even if the assessee claims that it has not incurred any expenditure in earning exempt income. With this all the arguments raised with regard to application of section 14A.read with rule 8D are deemed to have been answered. 4.2.2. Now the issue left with us is to see the correctness of working of limb(ii) and limb(iii) of rule 8D. During the course of appellate proceedings the appellant has submitted its own working of disallowance of Rs. 3,38,232 wherein he has taken the interest of Rs.3,63,541 as component A in the formula AxB/C stating "interest which cannot be directly attributed", against the interest of Rs. 19,28,058 debited in the P&L account. The learned AR has argued that this amount consists of interest on term loan and deposits of Rs. 3,63,541, bank charges of Rs. 10,87,665 and other interest payments of Rs 4,76,852. After careful examination of the schedule attached to the P&L account, I hold that the A component should consist of Rs. 3,63,541 and Rs.4,76,852 since these amounts are interest expenses "which is not directly attributable to any particular income or receipt" (refer rule 8D (2)(ii)). However, for sure the bank charges of Rs. 10,87,665 are not forming part of interest as contemplated in the rules, therefore the same should be deleted from the combined figure of interest debited in the P&L account. In short the A component should be taken as Rs. 8,40,393 (3,62,541 + 4,76,852). With regard to component B, it was argued that some of the investments pertain to growth funds and the sale proceeds of which are taxable under capital gains, therefore they are to be reduced while working out "average investment". I fully agree with the argument of the learned AR. I therefore direct the AO to separate growth funds from the working of average investment to arrive at the component B. However with regard to component C, I do not find any inconsistency in taking the total assets as per balance-sheet before the reduction of current liabilities and provisions as was done by the AO. In view of the above discussion, the AO is directed to rework the disallowance under limb(ii) of rule 8D. 4.2.3. With regard to disallowance under limb (iii) of rule 8D, the same is applicable to work out indirect expenses relatable to earning of exempt income in the instant case. Reliance is placed on the decision in the case of Escorts Ltd, 102 TTJ 522, wherein the ITAT Delhi has clearly held that indirect management and administrative expenses qualify for disallowance u/s 14A and there is no decision so far by a similar forum contradicting the above findings. Similar view was also taken by IT, Chennai in the case of Southern Petrochemical Industries (93 TTJ 161) as under: “... Whether to invest or not to invest and whether to retain the investments or to liquidate the same very strategic decisions which the management is called upon to take. These are mind-boggling decisions and top management Is involved in taking these decisions. This decision-making process very complicated and requires very careful analysis. Moreover, the assessee had to keep track of various dividend Incomes declared by the investee companies and also to keep track of the dividend income having been regularly received by the assessee. That activity itself called for considerable management attention and could not be left to a junior clerk.” This view has been further supported by the decisions of Hon'ble Kerala High Co in the case of Smt. Leena Ramachandran (2011) (339 ITR 293) (Kerala HC) and latest decision of the jurisdictional ITAT in the case of Dufon Laboratories P Ltd (2014) 50 taxmann.com143 and Citicorp Finance India Ltd,12 SOT 248 (Mum) However, while taking the figure of average investments, here also the AO should take care in reducing the growth funds from the investments shown by the appellant in the balance-sheet and rework the disallowance under limb(iii) of rule 8D. 4.2.4. In view of the above -discussion it is stated that all the grounds raised with regard to disallowance made u/s 14A are deemed to have been answered and' ground is partly allowed.”
Aggrieved by the appellate orders dated 25-1-2016 passed by learned CIT(A), the assessee has come in an appeal before the tribunal .
The Ld. Counsel for the assessee submitted before the tribunal that own funds were more than the investment made. It was submitted that the assessee has voluntarily offered expenditure for disallowance u/s 14A to the tune of Rs. 1.25 lacs . It was submitted that no interest is disallowable u/s 14A r.w.r. 8D(2)(ii) of the 1962 Rules. The assessee submitted that overdraft availed from banks are not linked to investments in shares. It was submitted that the assessee has filed extract of the Balance Sheet wherein the shareholders funds are available to the tune of Rs. 197.47 crores ( including 6 share capital and reserves and surplus) while investments are to the tune of Rs. 161.38 crores and it is submitted by the assessee that its own funds are more than the investments and hence no disallowance are warranted u/s. 14A r.w.r. 8D(ii), the assessee relied upon the decision of the Hon‟ble Bombay High Court in the case of HDFC Ltd. v. DCIT (2016) 383 ITR 529(Bom) and CIT v. Reliance Utilities & Power Ltd. (2009) 313 ITR 340(Bom). Our attention was drawn to the assessment order of the A.O wherein the facts of Reserve and Surplus owned by the assessee as well as investment made by the assessee are reflected, wherein it is reflected that own funds are more than investments made by the assessee as at the beginning of the year as well at the end of the year. With respect of the 0.5% disallowance confirmed by the learned CIT-A , it is submitted that the appellate order of learned CIT-A is reasonable so far as disallowance u/r 8D(2)(iii) of 1962 Rules r.w.s. 14A is concerned which is acceptable to the assessee. The Ld. DR on the other hand submitted that assessee has not proved nexus of the fund invested in the investments made with the borrowed/ own funds and hence since there were mixed pool of fund , the order of AO was correct and additions be upheld.
We have considered rival contentions and have perused the material on record . We have observed that the assessee is in the business of manufacturing and trading in carburettors and parts thereof for two/three wheelers, stationary engines and other auto components, parts and computer fan assembly. The assessee has investments of Rs.161.38 crores (Rs 138.73 crores as at 31-03-2010 ) as at 31.03.2011 while interest free own funds are to the tune of 197.48 crores being Share Capital and „Reserve and Surplus‟ (Rs. 174.76 crores as at 31-03-2010) as at 31.03.2011. The assessee has filed audited balance sheet before the Bench to support such financial details which is placed in file. The assessee relied upon decision of Hon‟ble Bombay High Court in the case of Reliance Utilities & Power Ltd. (supra) and HDFC Ltd. (supra) and presumption will apply that the assessee invested its own funds for making investments yielding an exempt income as nothing has been brought on record by the AO to prove that borrowed funds were utilised for making investments . Since the assessee‟s own funds of Rs.
197.47 (174.76 crores as at 31-03-2010) crores as at 31-03-2011 are more than the investments of Rs. 161.38 crores ( Previous year Rs. 138.73 crores as at 31-3-2010) as at 31-03-2011 and thus keeping in view ratio of decision of Hon‟ble Bombay High Court in the case of HDFC Ltd.(supra) and Reliance Utilities & Power Ltd. (supra), presumption will apply and no disallowance is warranted u/s. 14A r.w.r. 8D2(ii) of the 1962 Rules, as the AO has failed to bring on record any direct nexus of the funds borrowed with investments made by the assessee in the instruments/securities capable of yielding exempt income. With regard to the disallowance of 0.5% of average investments u/s. 14A r.w.r. 8D2(iii) of the 1962 Rules , the Ld. Counsel for the assessee does not want to press/litigate this issue and accepted the decision of learned CIT(A). The Revenue is not in appeal before the tribunal on this issue against the decision of learned CIT(A) decision. The assessee has fairly conceded to the disallowance of direct expenses incurred for earning of exempt income which was voluntarily disallowed by the assessee before the authorities which shall remain additionally as disallowed u/s 14A being direct expenses attributable to earning of exempt income. We order accordingly. This issue is partly allowed. We order accordingly.
Second issue is with regard to disallowance of depreciation claimed by the assessee on certain new Plant and Machinery purchased and delivered on 30.09.2010 on which the assessee has claimed full depreciation at the prescribed rate for the entire year , although as per the A.O the same is allowable at the rate of 50% of the total depreciation allowable to the assessee at the prescribed rates. The assessee submitted before the A.O as under:- “ The assessee company is engaged in manufacture of carburettors for two wheelers and three wheelers. The main raw material for the purpose of manufacture of carburettors is zinc and aluminium. The main bodies i.e., the carburettor is manufactured form the raw material by a process known as pressure Die Casting. The Carburettor so manufactured has zinc, aluminium and brass parts which require to under go many operations before the same is complete in all respects and ready for sale. These operations include drilling, tapping, brushing, boring, threading, slitting, etc. During the year, the Company purchased various heads required for the above operations from Sugino Machines Singapore Pte. Ltd; Singapore. These were purchased Vide their invoice no. 20100233 (pages 1 to 22) (copies already filed) dated 11th August 2010. These were received by the assessee Company on 12th August, 2010. The programmed Logical Control (PLCs) required for the purpose these operations were purchased form Messung Systems Pvt. Ltd. Bhoseri Pune vide their invoice no. 0000001408 dated 31st July, 2010 (copy already filed) which were received by the assessee Company on 7h August,. 2010. These heads and PLCs were then sent to Kalika Engineering, Pune for assembling purpose. Kalika Engineering developed respective special purpose machines by aligning the fixtures. The trial rungs fort he individual machines were taken by the Company's technical personeel at Kalika Engineering as and when these were completed The final inspection was carried out on 24h September, 2010. These machines were received from Kalika Engineering form time to time when these were complete and the last of such machines were received on 30th September, 2010.” The A.O rejected the contentions of the assessee by holding as under, vide assessment order dated 10-3-2014 passed by the AO u/s 143(3) of the 1961 Act:- “ 5.2 The above contention of the assessee is totally unacceptable and without any basis since the assessee was not able to substantiate that the said machines were put to use on the last date of September, 2010. Also it is pertinent to mention here that though the delivery challans are of the date 29.09.2010, however on its back side its clearly mentioned as supplied on 30-09-2010. Thus even though repeated opportunities were provided, the assessee was not able to justify its claim of depreciation for the full year. , S.NO ASSET- Plant INVOICE DELIVERY G.R.N DATE AMOUNT & Machinery DATE CHALLAN DATE 1 SPM 4 29-09-2010 29-09-2010 30-09-2010 20,21,310 2 SPM 5 29-09-2010 29-09-2010 30-09-2010 17,09,910 3 SPM 7 29-09-2010 29-09-2010 30-09-2010 13,78,045 4 SPM 8 29-09-2010 29-09-2010 30-09-2010 10,94,280 62,03,545/- TOTAL
5.3 Thus the claim of depreciation of the assessee amounting to Rs. 21,71,241/- @ 35% is rejected and only 50% of the said amount i.e Rs. 10,85,620/- is hereby allowed.”
Aggrieved by the assessment order dated 10-3-2014 passed by the AO u/s 143(3), the assessee filed first appeal with learned CIT(A) which was dismissed by learned CIT(A) by holding as under, vide appellate order dated 25-1-2016 passed by learned CIT(A): “ 5.2 I have carefully considered the facts of the case and the submissions of the ld. AR. During the course of appellate proceedings the learned AR has submitted the list of the items- A) SPM-1 to 8 (special purpose machines) under plant and machinery, B) canteen equipments, C) canteen furniture-along with the work reports and the parts purchased prior to dates of assembling. As per these work reports assembling has taken place well prior to 30th September 2010. In the summary sheet at the last column –“Date on which the asset was put to use”-it was mentioned as 30 September 2010 . There is no dispute in that regard. From the above details it is amply clear that the machinery was ready for use by 30 September 2010. However , the unanswered question still remains as to whether all these assembled parts of plant and machineries and canteen equipments were put to use on 30 September 2000 itself or not. The learned AR has neither given any evidence to show that the machinery in question can be directly put to use within a single day i.e. on 30th September 2010 as was claimed by him nor he has given any evidence in the form of output of the machinery to show that the same was put to use on the last date either before the AO are before me.In the absence of these details it is held that even though the machinery was ready for use it was not put to use within the prescribed time limit. In view of this I confirm the disallowance made by the AO. The ground is dismissed.”
Aggrieved by the appellate order dated 25-1-2016 passed by learned CIT(A) , the assessee has come in an appeal before the tribunal . The ld counsel for the assessee submitted that assessee has claimed depreciation at the prescribed rate for the full year as the machines were installed before 30.09.2010 and the machine were ready to be put to use before 30.09.2010, although these machines were not put to use before 30.09.2010. The assessee relied upon the following case laws:- a) DCIT v. PRS Metalliks Limited in order dated 10-1-2018. b) General Mills India Private Limited v. Addl. CIT in ITA no. 2582/Mum/2011 order dated 31-10-2014 c) Babul Products Private Limited v. ACIT in ITA no. 553/Ahd/2014 order dated 09-10-2017 The learned DR submitted that the assessee purchased new machineries but did not put to use the new assets prior to 30-09-2010. It was submitted that depreciation @50% of the prescribed rates may be allowed to the assessee as provided under the 1961 Act . The learned DR relied upon orders of the authorities below.
We have considered rival contentions and perused the material on record including case laws relied upon. We have observed that the assessee is in the business of manufacturing and trading in carburettors and parts thereof for two/three wheelers, stationary engines and other auto components, parts and computer fan assembly . The assessee had purchased certain plant and machineries which were purchased in or around 30.09.2010 . The assessee had claimed that these plant and machineries were installed on or before 30- 09-2010 and they were ready to use before 30.09.2010 and hence depreciation at the prescribed rate for the entire year shall be allowed although they were not put to use before 30.09.2010 during the relevant previous year. As it is a legal issue we need to carefully peruse the provisions of Section 32 of the 1961 Act. Perusal of the provisions of Section 32 of the Act, clearly stipulates that in case of depreciation , inter-alia, with respect to Plant & Machinery as is stipulated u/s 32 , it shall be allowed if the said asset is owned by the assessee and used for the purposes of the business of the assessee. It is further provided by the proviso to Section 32 of the 1961 Act that in the case of the newly acquired asset, if the asset is put to use for the purposes of the business and profession of the assessee for the period of less than the 180 days in the previous year , then the deduction shall be restricted to 50% of the amount calculated at the prescribed rates. The asset owned by the assessee as under:-
S. No. ASSET - Plant INVOICE DEUVERY G.R.N. AMOUNT - DATE CHALLAN DATE & Machinery DATE 1 SPM4 29/09/2010 29/09/2010 30/09/2010 20,21,310 2 SPM 5 29/09/2010 29/09/2010 30/09/2010 17,09,910 3 SPM 7 29/09/2010 29/09/2010 30109/2010 13,78,045 4 SPM 8 29/09/2010 29/09/2010 30/09/2010 10,94,280 TOTAL 62,03,545/- The second condition is that the asset should be put to use for the period of 180 days or more to claim depreciation for the full year at the prescribed rates otherwise depreciation @50% of the prescribed rates shall be available. The relevant provisions of Section 32 is reproduced hereunder: “Depreciation. 32. (1) [In respect of depreciation of— (i) buildings, machinery, plant or furniture, being tangible assets; (ii) know-how, patents, copyrights, trade marks, licences, franchises or any other business or commercial rights of similar nature, being intangible assets acquired on or after the 1st day of April, 1998, owned, wholly or partly, by the assessee and used for the purposes of the business or profession, the following deductions shall be allowed—] (i) in the case of assets of an undertaking engaged in generation or generation and distribution of power, such percentage on the actual cost thereof to the assessee as may be prescribed;] (ii) [in the case of any block of assets, such percentage on the written down value thereof as may be prescribed:] [***] [Provided [***] that no deduction shall be allowed under this clause in respect of— (a) any motor car manufactured outside India, where such motor car is acquired by the assessee after the 28th day of February, 1975 [but before the 1st day of April, 2001], unless it is used— (i) in a business of running it on hire for tourists ; or (ii) outside India in his business or profession in another country ; and (b) any machinery or plant if the actual cost thereof is allowed as a deduction in one or more years under an agreement entered into by the Central Government under section 42 :] [Provided further that where an asset referred to in clause (i) or clause (ii) [or clause (iia)] [or the first proviso to clause (iia)], as the case may be, is acquired by the assessee during the previous year and is put to use for the purposes of business or profession for a period of less than one hundred and eighty days in that previous year, the deduction under this sub-section in respect of such asset shall be restricted to fifty per cent of the amount calculated at the percentage prescribed for an asset under clause (i) or clause (ii) [or clause (iia)], as the case may be :] “
The assessee has although stated that the asset was not put to use before 30-09-2010 but it is not brought on record as to when the new assets were put to use for the purposes of its business during the relevant previous year although it is claimed that the asset was installed on or before 30-09-2010. The date of being put to use for the purposes of business of the assessee being relevant cut off date for allowability of depreciation is not on record . One more error is committed by both the rival parties, as the law makers have stipulated user of less than 180 days for allowability of depreciation at 50% of the prescribed rates while otherwise full depreciation at the prescribed rates is allowable , the rival parties erred in taking cut off date as completion of six months i.e. 30-09-2010 while the cut off date will be 03- 10-2010 if the user of 180 days or more is to be counted and hence if the asset is put to use for the purposes of business of the assessee on or before 03-10-2010 , the compliance for claiming full depreciation at prescribed rate will be available. The law makers have used the word „a period of less than one hundred and eighty days in that previous year‟ and not six month and in our considered view, the assessee is entitled for this beneficial provision and this benefit of extended window till 03-10-2010 cannot be denied to the assessee by restricting it to being put to use on or before 30-09-2010. We are of the considered view that this issue/ matter need to be send back and restored to the file of the A.O for de-novo determination of the issue on merits after identifying and verifying the actual date of asset being put to use during previous year for granting the benefits of depreciation for the full period at the prescribed rates. The assessee relied upon certain case laws which are in different context as in those cases there was a temporary suspension in the business etc and none of the cases dealt with the factual matrix of the instant case as is before us in the present appeal . We would like to clarify that the assessee has purchased new assets and it is incumbent on the assessee to have demonstrated actual user of the asset for a period of 180 days or more for the purposes of business of the assessee during the relevant previous year to claim depreciation for the full year at the prescribed rate as is mandated u/s 32. This issue is allowed for statistical purposes. We order accordingly.
In the result appeal of the assessee is partly allowed as indicated above Order pronounced in the open court on 22.01.2018 आदेश की घोषणा खुऱे न्यायाऱय में ददनांकः 22.01.2018 को की गई । Sd/- Sd/- (MAHAVIR SINGH ) (RAMIT KOCHAR) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai, dated: 22.01.2018
Nishant Verma Sr. Private Secretary