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Income Tax Appellate Tribunal, DELHI BENCH : F : NEW DELHI
Before: SHRI R.S. SYAL, AM & MS SUCHITRA KAMBLE, JM
ORDER PER R.S. SYAL, AM:
This appeal by the Revenue and the Cross Objection by the assessee arise out of the order passed by the CIT(A) on 21.12.2012 in relation to the Assessment Year 2009-10.
First ground of the Revenue’s appeal and the only ground of the assessee’s cross objection is against the deletion/sustenance of addition on account of depreciation claimed by the assessee on the amount of capital subsidy on fixed assets purchased by the assessee.
Briefly stated, the facts of the case are that the assessee made a claim for subsidy amounting to Rs.25,07,500/- which was credited to `Capital reserve account’, but, not reduced from the cost of plant and machinery.
The AO, invoking the provisions of section 43(1) read with Explanation 10 came to hold that this amount of capital subsidy was liable to be reduced from the block of fixed assets. Resultantly, depreciation amounting to Rs.3,76,125/- @ 15% on such unreduced amount of subsidy from the fixed assets was disallowed. The assessee contended before the ld. CIT(A) that 3 CO No.117/Del/2013 this sum of Rs.25,07,500/- was not actually received during the previous year relevant to the assessment year under consideration and, hence, the same should not be reduced from the block of assets. It was further contended that the actual amount of subsidy received in the succeeding year may be directed to be reduced from the block of fixed assets in such a later year accordingly. The ld. CIT(A) got convinced and ordered for the deletion of addition of Rs.3,76,125/-. Both the sides are in appeal on this issue.
After considering the rival submissions and perusing the relevant material on record, we find that similar issue came up before the Tribunal in the assessee’s own case for the assessment year 2008-09 in and CO No. 54/Del/2013. Vide order dated 28.8.2014, the Tribunal has given certain directions on this aspect of the matter. Since the facts and circumstances of the year under consideration are admittedly similar to those of the preceding year decided by the Tribunal, respectfully following the precedent, we set aside the impugned order and remit the matter to the file of AO for deciding this issue in conformity with the directions given by the Tribunal for the immediately preceding assessment
4 CO No.117/Del/2013 year. Needless to say, the assessee will be allowed a reasonable opportunity of hearing in such proceedings.
The only other ground which survives in the Revenue’s appeal is against the deletion of addition of Rs.8,64,000/- made by the AO u/s 14A of the Act.
Briefly stated, the facts of the case are that the assessee invested a sum of Rs.72 lacs in the shares of M/s Richa Infrastructure Ltd. On being called upon to explain as to why the proportionate interest be not disallowed u/s 14 of the Act, the assessee submitted that the investment in the shares of this company was financed out of own funds. Rejecting the assessee’s contention, the AO computed disallowance u/s 14A at Rs.8,64,000/- by applying interest rate of 12% on the amount of investment of Rs.72 lac. In doing so, he observed that income from such shares in the nature of dividend would be exempt u/s 10(34) of the Act. The ld. CIT(A) deleted the addition made by the AO.
We have heard the rival submissions and perused the relevant material on record. The AO has made disallowance of interest on proportionate basis by invoking the provisions of section 14A read with Rule 8D. It is observed
5 CO No.117/Del/2013 that similar issue was there in the assessee’s appeal for AY 2008-09 as well. The Tribunal has sustained a part of disallowance made u/s 14A while deleting the other part of the disallowance. Both the sides are in agreement that the facts and circumstances of the issue under consideration are mutatis mutandis similar to those for the preceding year. Respectfully following the precedent and without going further into the facts or legality of the matter, we set aside the impugned order and restore the matter to the file of the AO for computing disallowance, if any, in conformity with the view taken by the Tribunal for the immediately preceding year.