AARTI DRUGS LTD, MUMBAI V. ADDL CIT RG 6(1), MUMBAI

ITA 6783/MUM/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 8615 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 3 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-02-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 07-11-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJESH KUMAR YADAV
• Keywords: Depreciation; Additional depreciation; Earning of tax free income
• Section: 14A; 32

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUM BAI , , BEFORE S/SHRI RAJENDRA, A.M. AND SANJAY GARG,J.M. ./ITA NO. 6783-84/MUM/2014 , / ASSESSMENT YEAR: 2010-11 & 2011-12 AARTI DRUGS LIMITED PLOT NO.109, D 3RD FLOOR, MAHENDRA INDL ESTATE.SION(E), MUMBAI-400 022. PAN: AAACA 4410 D VS. ADDL. CIT, RANGE-6(1) AAYAKAR BHAVAN, MUMBAI. ( /APPELLANT ) ( / RESPONDENT ) REVENUE BY: SHRI RAJESH KUMAR YADAV ASSESSEE BY: SHRI ANUJ KISNADWALA / DATE OF HEARING: 18.01.2017 / DATE OF PRONOUNCEMENT: 10 .02.2017 ,1961 254(1) ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) , -PER RAJENDRA,AM: CHALLENGING THE ORDERS DATED 12/08/2014 OF CIT (A)- 14,MUMBAI THE ASSESSEE HAS FILED APPEALS FOR THE ABOVE-MENTIONED TWO AY.S.ASSESSEE-COMPANY I S ENGAGED IN THE BUSINESS OF MANUFACTUR- ING SPECIALITY CHEMICALS AND BULK DRUGS. AS THE ISS UES INVOLVED IN BOTH THE YEARS ARE COMMON, SO,WE ARE PASSING A COMMON ORDER.THE DETAILS OF DAT ES OF FILING OF RETURNS,RETURNED INCOMES, ASSESSMENT COMES ETC.CAN BE SUMMARISED AS UNDER: AY. ROI FILED ON RETURNED INCOME ASSTT.DATE ASSESSE D INCOME 2010-11 30.09.2010 RS.40.86 CRORES 09.03.2013 RS.42 .23 CRORES 2011-12 30.09.2011 RS.18.37 CRORES 31.10.2013 RS.20 .27 CRORES ITA/6784/MUM/2014,AY.2010-11. 2. FIRST EFFECTIVE GROUND OF APPEAL IS ABOUT DISALLOWA NCE U/S.14 A OF THE ACT, AMOUNTING TO RS. 6.28 LAKHS.DURING THE ASSESSMENT PROCEEDINGS, THE A O FOUND THAT ASSESSEE HAD RECEIVED A DIVIDEND INCOME OF RS.50,944/- AND HAD CLAIMED THE SAME AS EXEMPT FROM TAX U/S.10 (34) OF THE ACT.HE DIRECTED THE ASSESSEE TO SUBMIT DETAILS OF E XPENDITURE INCURRED IN RELATION TO ABOVE EXEMPT INCOME AND TO FILE WORKING OF DISALLOWANCE A S PER SECTION 14 A READ WITH RULE 8D OF THE INCOME TAX RULES,1962 (RULES). AFTER CONSIDERING TH E SUBMISSIONS OF THE ASSESSEE, THE AO MADE A DISALLOWANCE OF RS.8.28 LAKHS (RS. 7.46 LAKHS UND ER THE HEAD INTEREST EXPENDITURE AND RS. 82, 210/-ON ACCOUNT OF 0.5% OF THE AVERAGE INVESTMENTS FOR THE YEAR UNDER CONSIDERATION). AS THE ASSESSEE ITSELF HAD MADE DISALLOWANCE OF RS. 2 LAKH S, SO, HE RESTRICTED IT TO RS.6.28 LAKHS. 6783-83/M/14910-11(11-12- AARTI DRUG LIMIT ED 2 2.1. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE PREF ERRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY(FAA).BEFORE HER,IT WAS ARGUED THAT THE AS SESSEE HAD NOT INCURRED ANY ADMISSION TO EXPENSES TO ALL EXEMPT INCOME, THAT IT HAD DISALLOW ED 10% OF SALARY OF EXECUTIVES AND 15% OF ADMINISTRATIVE OVERHEADS I.E.RS. 2 LAKHS ON ITS OWN . AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE AN D THE ASSESSMENT ORDER, THE FAA HELD THAT PROVISIONS OF SECTION 14A READ RULE 8D OF THE RULES WERE APPLICABLE FOR THE YEAR UNDER APPEAL, THAT THE ASSESSEE WAS HAVING MIXED FUND, THAT IT HA D NOT KEPT SEPARATE ACCOUNTS FOR INVESTMENT AND BUSINESS.SHE REFERRED TO CASES OF LAKSHMI RING TRAVELLERS(TS-210-ITAT-2012),JK INDUST - RIES(ITA/7088/MUMBAI/2011, DATED 21/11/2012) DAGA C APITAL MANAGEMENT PRIVATE LTD (26SOT603) AND UPHELD THE ORDER OF THE AO. 2.2. DURING THE COURSE OF HEARING BEFORE US, THE AUTHORI SED REPRESENTATIVE (AR) ARGUED THAT NO INTEREST DISALLOWANCE COULD BE MADE U/S.14 A WHEN T HE ASSESSEE OWNED SUFFICIENT FUNDS TO COVER OF THE VALUE OF INVESTMENTS, THAT THE DISALLOWANCE HAD TO BE RESTRICTED TO THE AMOUNT OF EXEMPT INCOME EARNED BY THE ASSESSEE DURING THE YEAR, THAT FOR THE PURPOSE OF DISALLOWANCE ONLY THOSE INVESTMENTS WERE TO BE CONSIDERED FROM WHICH EXEMPT INCOME HAD BEEN RECEIVED, THAT NO DISALLOWANCE COULD BE MADE IF THE INVESTMENT WAS IN SUBSIDY/GROUP COMPANY, THAT THE AO HAD NOT RECORDED DISSATISFACTION BEFORE INVOKING THE PR OVISIONS OF SECTION 14 A READ WITH RULE 8D OF THE RULES, THAT FUNDS AVAILABLE WITH THE ASSESSEE F OR THE YEAR UNDER APPEAL AMOUNTED TO RS.1, 41, 09, 15, 920/-AND THAT ASSESSEE HAD MADE INVESTMENT OF RS. 21.37CRORES, THAT IT HAD EARNED EXEMPT INCOME OF RS.50,944/-. HE RELIED UPON THE CASES OF RELIANCE UTILITIES LTD(313ITR340),HDFC BANK LTD.(366 ITR 505) JOINT INVESTMENTS(372 ITR 69 4)ACB INDIA(374 ITR 108) CHEMINVEST LTD. (378 ITR 33).THE DEPARTMENTAL REPRESENTATIVE ( DR) SUPPORTED THE ORDER OF THE FAA. 2.3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US. WE FIND THAT DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE HAD CLAIM ED EXEMPTION OF RS.50,944/-U/S.10 (34) OF THE ACT, THAT IT HAD MADE A DISALLOWANCE OF RS. 2 LAKHS ON ITS OWN, THAT THE AO MADE A DISALLOWANCE OF RS. 7.46 LAKHS AND RS. 82, 210/-ON ACCOUNT OF IN TEREST EXPENDITURE AND ADMINISTRATIVE EXPENSES RESPECTIVELY,THAT THE FAA UPHELD THE ORDER OF THE A O, THAT THE ASSESSEE HAD SUFFICIENT OWN FUNDS (RS.141.09 CRORES) TO MAKE INVESTMENT OF RS. 21.37 CRORES. AS PER THE SETTLED PRINCIPLES OF TAXATION DEALING WITH THE PROVISIONS OF SECTION 14A IF THE ASSESSEES OWN FUNDS ARE SUFFICIENT TO 6783-83/M/14910-11(11-12- AARTI DRUG LIMIT ED 3 MAKE INVESTMENTS NO DISALLOWANCE UNDER THE HEAD INT EREST EXPENDITURE SHOULD BE MADE. IN THE CASE OF RELIANCE UTILITIES THE HONBLE BOMBAY HIGH COURT HAS HELD AS FOLLOW: IF THERE WERE FUNDS AVAILABLE BOTH INTEREST-FREE AN D OVERDRAFT AND/OR LOANS TAKEN, THEN A PRESUMPTION WOULD ARISE THAT INVESTMENTS WOULD BE O UT OF THE INTEREST-FREE FUNDS GENERATED OR AVAILABLE WITH THE COMPANY, IF THE INTEREST-FREE FU NDS WERE SUFFICIENT TO MEET THE INVESTMENTS. SECTION 14A WAS INTRODUCED TO PREVENT THE MISUSE OF DOUBLE DEDUCTIONS I.E. CLAIMING EXEMPTIONS AGAINST THE EXEMPT INCOME SO THAT DISALLOWANCE HAS TO BE RESTRICTED TO EXEMPT INCOME ONLY. HERE, WE WOULD LIKE TO REPRODUCE RELEVANT PORTION OF THE JUDGMENT OF JOINT INVESTMENTS(SUPRA), OF HONBLE DELHI HIGH COURT AND IT READS AS UNDER: SECTION 14A OR RULE 8D OF THE INCOME-TAX RULES, 1962, CANNOT BE INTERPRETE D SO AS TO MEAN THAT THE ENTIRE EXEMPT INCOME IS TO BE DISALLOWED. THE W INDOW FOR DISALLOWANCE WAS INDICATED IN SECTION 14A AND WAS ONLY TO THE EXTENT OF DISALLOWI NG EXPENDITURE INCURRED BY THE ASSESSEE IN RELATION TO THE TAX EXEMPT INCOME.THIS PROPORTION OR PORTION OF THE EXEMPT INCOME SURELY CANNOT SWALLOW THE ENTIRE AMOUNT. AS THE SUO MOTU DISALLOWANCE MADE BY THE ASSESSEE I S FAR MORE THAN THE EXEMPT INCOME EARNED BY IT, SO,IN OUR OPINION THERE WAS NO JUSTIFICATION FOR MAKING ANY FURTHER DISALLOWANCE. REVERSING THE ORDER OF THE FAA,WE DECIDE FIRST GROUND OF APPE AL IN FAVOUR OF THE ASSESSEE. 3. SECOND GROUND OF APPEAL IS ABOUT DISALLOWANCE OF AD DITIONAL DEPRECIATION OF RS. 1.31 CRORES. DURING THE ASSESSMENT PROCEEDINGS, THE AO FOUND THA T THE ASSESSEE HAD CLAIMED ADDITIONAL DEPRECIATION TO THE TUNE OF RS. 1.85 CRORES WHICH W AS 10% OF THE ADDITIONAL DEPRECIATION SINCE THE ASSETS PUT TO USE WERE FOR THE PERIOD LESS THAN SIX MONTHS.HE HELD THAT ASSESSEE WAS NOT ENTITL -ED TO CLAIM SUCH DEDUCTION AS PER THE PROVISIONS O F SECTION 32 (1) (IIA) OF THE ACT. 3.1. DURING THE APPELLATE PROCEEDINGS BEFORE THE FAA,THE ASSESSEE CONTENDED THAT ADDITIONAL DEPRECIATION WAS MANDATORILY REQUIRED TO BE ALLOWED , THAT THE PROVISIONS OF SECTION 32 (1) (IIA) DID NOT STIPULATE THAT THE ADDITIONAL DEPRECIATION HAD TO BE ALLOWED ONLY IN THE FIRST YEAR OF CLAIM, THAT THE PROVISO TO SECTION 32 (1) DID NOT TAKE AWA Y THE BALANCE CLAIM EVEN IF THE ASSETS WERE PUT TO USE FOR LESS THAN 180 DAYS,THAT IT WAS AN INCENT IVE PROVISION AND HAD TO BE INTERPRETED LIBERALLY. 3.2. AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE AN D THE ASSESSMENT ORDER, THE FAA HELD THAT THE ASSESSEE HAD CLAIMED 50% OF THE ADDITIONAL DEPR ECIATION IN THE PREVIOUS YEAR, THAT CLAUSE (II 6783-83/M/14910-11(11-12- AARTI DRUG LIMIT ED 4 A)TO SECTION 32 (1) WAS INSERTED BY THE FINANCE ACT , 2002 W.E.F.01/04/2003, THAT IT WAS INTRODUCED AS AN INCENTIVE FOR FRESH INVESTMENT IN THE INDUSTRIAL SECTOR, THAT ADDITIONAL DEPRECIATION COULD BE CLAIMED ONLY IN THE YEAR OF A CQUISITION AND NOT IN LATER YEARS, THAT THE SECOND PROVISO TO SECTION 32 (1) (IIA) PUTS RESTRIC TION ON CLAIMING ADDITIONAL DEPRECIATION IN THE LATER YEARS, THAT THE CONCEPT OF ACTUAL COST WAS RE LEVANT ONLY IN THE YEAR OF ACQUISITION OF ASSETS, THAT THE ADDITIONAL DEPRECIATION HAD TO BE COMPUTED WITH REFERENCE TO THE ACTUAL COST, THAT THE CONCEPT OF ACTUAL COST WOULD NOT SURVIVE IN THE SEC OND YEAR/SUBSEQUENT YEARS OF ACQUISITION OF THE ASSETS. SHE REFERRED TO THE CASE OF BRAKES INDI A LTD (96 DTR 281) AND STATED THAT THE ASSETS IN QUESTION WERE REQUIRED IN THE AY.2009-10 AND WERE P UT TO USE IN THE SAME YEAR, THAT THE ADDITIONAL DEPRECIATION COULD BE CLAIMED IN THE YEA R OF ACQUISITION AND NOT LATER, THAT ASSESSEE COULD NOT CLAIM BALANCE ADDITIONAL DEPRECIATION DUR ING THE CURRENT AY.FINALLY, SHE UPHELD THE ORDER OF THE AO. 3.3. BEFORE US THE AR ARGUED THAT THE AMENDED PROVISIONS REGARDING ADDITIONAL DEPRECIATION WERE NOT CONSIDERED BY FAA WHILE DECIDING THE APPEAL,THA T THE ASSESSEE WAS ENTITLED TO CLAIM 50% OF THE ADDITIONAL DEPRECIATION I.E. 10% DURING THE YEA R UNDER CONSIDERATION.HE RELIED UPON THE CASE OF RITTAL INDIA PVT. LTD.-NO.1(380 ITR 423). THE D R SUPPORTED THE ORDER OF THE FAA. 3.4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.WE FIND THAT THE FAA HAD DISALLOWED THE CLAIM MADE BY THE ASSESSEE U /S.32(1)(IIA),THAT SHE WAS OF THE OPINION THAT IT WAS AVAILABLE FOR ONE YEAR ONLY I.E.IN INIT IAL YEAR,THAT THE ASSESSEE HAD CLAIMED 50% OF THE DEDUCTION AS THE MACHINERY WAS USED FOR A PERIOD LE SS THAN 180 DAYS IN THE LAST AY.,THAT IT HAD CLAIMED THE BALANCE DEDUCTION IN THE YEAR UNDER APP EAL.WE FIND THAT IN THE CASE OF RITTAL INDIA PVT. LTD. -NO.1(SUPRA) THE HONBLE KARNATAKA HIGH C OURT HAS DEALT THE IDENTICAL ISSUE. FACTS OF THE CASE WERE THAT THE ASSESSEE WAS AN EXI STING INDUSTRIAL UNDERTAKING, WHEN IT HAD ACQUIRED AND INSTALLED NEW PLANT AND MACHINERY IN T HE FY.2006-07,THAT IT HAD CLAIMED 50% OF ADDITIONAL 20% DEPRECIATION(I.E.,10% ADDITIONAL DEP RECIATION) U/S.32(1)(IIA) OF THE ACT IN THE CORRESPONDING AY.2007-08,THAT THE NEW MACHINERY WAS ACQUIRED AFTER 01/10/ 2006,THAT THE MACHINERY WAS PUT TO USE FOR THE PURPOSE OF BUSINES S FOR A PERIOD OF LESS THAN 180 DAYS,THAT U/S. 32(1)(IIA), READ WITH THE SECOND PROVISO TO SECTION 32(1)(II) OF THE ACT, FOR THE AY. 2007-08,THE ASSESSEE WAS GRANTED BENEFIT OF 50% OF THE 20% OF T HE AMOUNT OF DEPRECIATION ALLOWABLE.DISPUTE 6783-83/M/14910-11(11-12- AARTI DRUG LIMIT ED 5 AROSE WITH REGARD TO THE ALLOWANCE OF THE BALANCE 1 0 % DEPRECIATION IN THE NEXT AY. I.E. FOR THE AY.2008-09.THE AO, AS WELL AS THE FAA DISALLOWED TH E CLAIM OF THE ASSESSEE, WHEREAS THE TRIBUNAL,ALLOWED THE APPEAL OF THE ASSESSEE.CHALLEN GING THE SAME,THE REVENUE FILED APPEAL BEFORE THE HONBLE COURT RAISING THE FOLLOWING TWO SUBSTANTIAL QUESTIONS OF LAW : '(I) WHETHER THE TRIBUNAL IS CORRECT IN EXTENDING T HE BENEFIT OF SEC TION 32(1)(IIA) OF THE ACT TO THE NEXT AY. WHEN THE INCOME TAX ACT DOES NOT PROVIDE F OR SUCH CARRYOVER, THEREBY VIOLATING THE LEGAL PRINCIPLES OF 'CASUS OMISSUS' WHICH STATES THAT THE COURTS CANNOT COMPENSATE FOR WHAT THE LEGISLATURE HAS OMITTED TO ENACT ? (II) WHETHER THE TRIBUNAL WAS CORRECT IN HOLDING TH AT ADDITIONAL DEPRECIATION ALLOWED U/S.32(1)(IIA) IS A ONE-TIME BENEFIT TO ENCOURAGE I NDUSTRIALISATION AND THE RELEVANT PROVISIONS HAS BEEN CON STRUED REASONABLY AND PURPOSIVE WITHOUT AP PRECIATING THAT THE ADDI TIONAL DEPRECIATION IS ALLOWED IN THE YEAR OF PURCHASE AND IF IN THE YE AR OF PURCHASE THE ASSESSEE IS ELIGIBLE ONLY FOR 50 PER CENT DEPRECIATION,THE BALANCE 50 PER CENT.CA NNOT BE CARRIED FORWARD FOR THE SUBSEQUENT YEAR ON THE CLAIM CANNOT BE ALLOWED IN ANY OTHER YE AR ?' THE HONBLE COURT AFTER REFERRING TO THE PROVISIONS OF SECTION 32(1) DEALT WITH THE CLAUSE (IIA)OF THE SECTION AND HELD AS UNDER: 7. CLAUSE (IIA) OF SECTION 32(1) OF THE ACT, AS IT NOW STANDS, WAS SUBSTITUTED BY THE FINANCE ACT, 2005, APPLICABLE WITH EFFECT FROM APRIL 1, 2006. PR IOR TO THAT, A PROVISO TO THE SAID CLAUSE WAS THERE, WHICH PROVIDED FOR THE BENEFIT TO BE GIVEN O NLY TO A NEW INDUSTRIAL UNDERTAKING, OR ONLY WHERE A NEW INDUSTRIAL UNDERTAKING BEGINS TO MANUFA CTURE OR PRODUCE DURING ANY YEAR PREVIOUS TO THE RELEVANT AY.. 8. THE AFORESAID TWO CONDITIONS, I.E., THE UNDERTAK ING ACQUIRING NEW PLANT AND MACHINERY SHOULD BE A NEW INDUSTRIAL UNDERTAKING, OR THAT IT SHOULD BE CLAIMED IN ONE YEAR, HAVE BEEN DONE AWAY BY SUBSTITUTING CLAUSE (IIA) WITH EFFECT FROM APRIL 1, 2006. THE GRANT OF ADDITIONAL DEPRECIATION, UNDER THE AFORESAID PROVISION, IS FOR THE BENEFIT O F THE ASSESSEE AND WITH THE PURPOSE OF ENCOURAGING INDUSTRIALISATION, BY EITHER SETTING UP A NEW INDUSTRIAL UNIT OR BY EXPANDING THE EXISTING UNIT BY PURCHASE OF NEW PLANT AND MACHINER Y, AND PUTTING IT TO USE FOR THE PURPOSE OF BUSINESS. THE PROVISO TO CLAUSE (II) OF THE SAID SE CTION MAKES IT CLEAR THAT ONLY 50 PER CENT. OF THE 20 PER CENT.WOULD BE ALLOWABLE, IF THE NEW PLANT AN D MACHINERY SO ACQUIRED IS PUT TO USE FOR LESS THAN 180 DAYS IN A FINANCIAL YEAR. HOWEVER, IT NOWH ERE RESTRICTS THAT THE BALANCE PER CENT.WOULD NOT BE ALLOWED TO BE CLAIMED BY THE ASSESSEE IN THE NEXT AY.. 9. THE LANGUAGE USED IN CLAUSE (IIA) OF THE SAID SE CTION CLEARLY PROVIDES THAT 'A FURTHER SUM EQUAL TO 20 PER CENT. OF THE ACTUAL COST OF SUCH MACHINER Y OR PLANT SHALL BE ALLOWED AS DEDUCTION UNDER CLAUSE (II)'. THE WORD 'SHALL' USED IN THE SAID CLA USE IS VERY SIGNIFICANT. THE BENEFIT WHICH IS TO BE GRANTED IS PER CENT. ADDITIONAL DEPRECIATION. BY VI RTUE OF THE PROVISO REFERRED TO ABOVE, ONLY PER CENT.CAN BE CLAIMED IN ONE YEAR, IF PLANT AND MACHI NERY IS PUT TO USE FOR LESS THAN 180 DAYS IN THE SAID FINANCIAL YEAR. THIS WOULD NECESSARILY MEAN TH AT THE BALANCE 10 PER CENT. ADDITIONAL DEDUCTION CAN BE AVAILED OF IN THE SUBSEQUENT AY., OTHERWISE THE VERY PURPOSE OF INSERTION OF CLAUSE (IIA) WOULD BE DEFEATED BECAUSE IT PROVIDES FOR PER CENT.DEDUCTION WHICH SHALL BE ALLOWED. 10. IT HAS BEEN CONSISTENTLY HELD BY THIS COURT, AS WELL AS THE APEX COURT, THAT THE BENEFICIAL LEGISLATION, AS IN THE PRESENT CASE, SHOULD BE GIVE N LIBERAL INTERPRETATION SO AS TO BENEFIT THE 6783-83/M/14910-11(11-12- AARTI DRUG LIMIT ED 6 ASSESSEE. IN THIS CASE, THE INTENTION OF THE LEGISL ATION IS ABSOLUTELY CLEAR, THAT THE ASSESSEE SHALL BE ALLOWED CERTAIN ADDITIONAL BENEFIT, WHICH WAS RESTR ICTED BY THE PROVISO TO ONLY HALF OF THE SAME BEING GRANTED IN ONE AY., IF CERTAIN CONDITION WAS NOT FULFILLED. BUT, THAT, IN OUR CONSIDERED VIEW, WOULD NOT RESTRAIN THE ASSESSEE FROM CLAIMING THE B ALANCE OF THE BENEFIT IN THE SUBSEQUENT AY.. THE TRIBUNAL, IN OUR VIEW, HAS RIGHTLY HELD, THAT A DDITIONAL DEPRECIATION ALLOWED U/S.32(1)(IIA) OF THE ACT IS A ONE-TIME BENEFIT TO ENCOURAGE INDUSTRI ALISATION, AND THE PROVISIONS RELATED TO IT HAVE TO BE CONSTRUED REASONABLY, LIBERALLY AND PURPOSIVE LY, TO MAKE THE PROVISION MEANINGFUL WHILE GRANTING THE ADDITIONAL ALLOWANCE. WE ARE IN FULL A GREEMENT WITH SUCH OBSERVATIONS MADE BY THE TRIBUNAL. 3.4.1. RESPECTFULLY,FOLLOWING THE ABOVE JUDGMENT, WE HOLD THAT THE ASSESSEE WAS ENTITLED TO CLAIM 10% ADDITIONAL DEPRECIATION DURING THE YEAR UNDER A PPEAL.REVERSING THE ORDER OF THE FAA,WE DECIDE THE SECOND GROUND OF APPEAL IN FAVOUR OF THE ASSESSEE. ITA/6783/MUM/2014- AY.2011-12 4. FIRST GROUND OF APPEAL IS ABOUT DISALLOWANCE OF RS. 32.61 LAKHS AND RS. 10.66 LAKHS UNDER THE HEADS INTEREST EXPENDITURE AND ADMINISTRATIVE EXPEN SES AS PER THE PROVISIONS OF SECTION 14 A READ WITH RULE 8D OF THE RULES.CONSIDERING THE FACTS -TH AT THE EXEMPT INCOME EARNED BY THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION WAS RS.73, 557/-, THAT IT HAD MADE DISALLOWANCE OF RS. 2 LAKHS ON ITS OWN, THAT IT HAD MADE INVESTMENT OF RS. 24.6 1 CRORES DURING THE YEAR UNDER APPEAL, THAT THE OWN FUNDS OF THE ASSESSEE AMOUNTED TO RS. 156.51 CR ORES ,WE HOLD THAT THE FAA WAS NOT JUSTIFIED IN CONFIRMING THE DISALLOWANCE MADE BY THE AO. FOLL OWING OUR ORDER FOR THE EARLIER YEAR,WE DECIDE FIRST GROUND IN FAVOUR OF THE ASSESSEE. 4.1. SECOND GROUND IS ABOUT DISALLOWANCE OF ADDITIONAL D EPRECIATION OF RS. 91.01 LAKHS AS PER THE PROVISIONS OF SECTION 32(1) (IIA) OF THE ACT FOR TH E MACHINERIES PUT TO USE IN THE EARLIER YEARS. WHILE DECIDING THE APPEAL FOR THE LAST AY.,WE HAVE DEALT WITH THE ISSUE. FOLLOWING THE SAME, GROUND NO. 2 IS DECIDED IN FAVOUR OF THE ASSESSEE. AS A RESULT, APPEAL FILED BY THE ASSESSEE FOR BOTH THE AY.S STAND ALLOWED. . ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH FEBRUARY, 2017. 10 , 2017 SD/- SD/- ( /SANJAY GARG) ( / RAJENDRA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; /DATED : 10.02.2017. JV.SR.PS. / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 6783-83/M/14910-11(11-12- AARTI DRUG LIMIT ED 7 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR A BENCH, ITAT, MUMBAI / , , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, MUMBAI.