ANUSHAKTI CHEMICALS AND DRUGS LTD, MUMBAI V. ADDL CIT 10(3), MUMBAI

ITA 7495/MUM/2010

• Counselvise Citation: 749519914 RSA 2010
• Duration Of Justice: 3 year(s) 3 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-02-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 05-11-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 02-11-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: M L PERUMAL
• Assessee Lawyers: VIJAY MEHTA
• Keywords: Depreciation; Additional depreciation; Earning of tax free income
• Section: 32; 11; 14A

Judgement Text

, INCOME TAX APPELLATE TRIBUNAL,MUMBAI - A BENCH. , ! ! ! ! , ,, , BEFORE S/SH. RAJENDRA,ACCOUNTANT MEMBER & VIVEK VAR MA,JUDICIAL MEMBER /. ITA NO.7495/MUM/2010, # # # # $ $ $ $ / ASSESSMENT YEAR-2007-08 ANUSHAKTI CHEMICALS AND DRUGS LTD. 2 ND FLOOR, UDYOG KSHETRA, MULUND, GOREGOAN, LINK ROAD, MUMBAI-400080 VS ADDL. CIT 10(3) MUMBAI. PAN: AAECA4760E ( %& / APPELLANT) ( '(%& / RESPONDENT) /. ITA NO.7126/MUM/2011, # # # # $ $ $ $ / ASSESSMENT YEAR-2008-09 ANUSHAKTI HOLDINGS LTD. (FORMERLY KNOWN AS ANUSHAKTI CHEMICALS AND DRUGS LTD. 2 ND FLOOR, UDYOG KSHETRA, MULUND, GOREGOAN, LINK ROAD, MUMBAI-400080 VS ADD. CIT 10(3) MUMBAI. PAN: AAECA4760E ( %& / APPELLANT) ( '(%& / RESPONDENT) #) #) #) #)* ** * + + + + / ASSESSEE BY : SHRI VIJAY MEHTA , + / REVENUE BY : SHRI M.L.PERUMAL # # # # , ,, , *- *- *- *- / DATE OF HEARING : 29-01-2014 ./$ , *- / DATE OF PRONOUNCEMENT : 19-02-2014 # # # # , 1961 , ,, , 254 )1( *0* *0* *0* *0* 1 1 1 1 ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA,AM # # # # : CHALLENGING THE ORDERS DT.03.08.2010 & 04.08.2010 O F THE CIT(A)-22,MUMBAI,ASSESSEE HAS FILED ALMOST IDENTICAL GROUNDS OF APPEAL FOR ASSESSMENT Y EAR(AY) 2007-08 READ AS UNDER: 1. RE: DISALLOWANCE OF THE ADDITIONAL DEPRECIATION U/S 32(1)(IIA) 1.1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS THE LEAR NED CIT(A)] HAS ERRED IN UPHOLDING THE DISALLOWANCE OF BALANCE ADDITIONAL DEPRECIATION OF 10% ON ADDITIONS MADE IN AY 2006-07. 2. RE: DISALLOWANCE U/S 14A 2.1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LEARNED CIT(A) HAS ERRED IN UPHOLDING DISALLOWANCE OF INTEREST AMOUNTING TO RS. 6,16,473/- AND ADMINISTRATIVE EXPENSES OF RS. 66,828/- U/S 14A. 2.2. WITHOUT PREJUDICE TO THE ABOVE, THE LEARNED CIT(A) OUGHT TO HAVE RECTIFIED ERRORS I N COMPUTATION OF DISALLOWANCE U/S 14A READ WITH RULE 8D. 3. THE APPELLANT CRAVES LEAVE TO ADD TO, ALTER, AMEND OR DELETE ANY GROUND OF APPEAL. FOLLOWING GROUNDS OF APPEAL HAVE BEEN FILED BY THE ASSESSEE FOR AY 2008-09:- 2 ITA NOS. 7495/MUM/2010 & 7126 MUM 2011 ANUSHAKTI CHEMICALS AND DRUGS LTD. 1. RE: DISALLOWANCE OF THE ADDITIONAL DEPRECIATION OF RS. 9,91,139 U/S. 32(1)(IIA): 1.1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS THE LEAR NED CIT(A)] HAS ERRED IN UPHOLDING THE DISALLOWANCE OF BALANCE ADDITIONAL DEPRECIATION OF 10% ON ADDITIONS MADE IN AY 2007-08. 1.2. THE LEARNED CIT(A) OUGHT TO HAVE CONSIDERED THAT PR OVISIONS GIVING BENEFIT TO THE ASSESSEE SHOULD BE LIBERALLY INTERPRETED. 2. RE: DISALLOWANCE U/S 14A AMOUNTING TO RS. 14,87,716 /-: 2.1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LEARNED CIT(A) HAS ERRED IN UPHOLDING DISALLOWANCE OF INTEREST AMOUNTING TO RS. 12,96,459/- AND ADMINISTRATIVE EXPENSES OF RS. 1,91,257/- U/S 14A. 2.2. THE LEARNED CIT(A) OUGHT TO HAVE CONSIDERED THAT TH E APPELLANT HAVE NOT RECEIVED ANY EXEMPT INCOME DURING THE CONCERNED ASSESSMENT YEAR AND HEN CE NO DISALLOWANCE OUGHT TO HAVE BEEN MADE. 2.3. WITHOUT PREJUDICE TO THE ABOVE, THE LEARNED CIT(A) OUGHT TO HAVE RECTIFIED ERRORS I N COMPUTATION OF DISALLOWANCE U/S 14A READ WITH RULE 8D. 3. THE APPELLANT CRAVES LEAVE TO ADD TO, ALTER, AMEND OR DELETE ANY GROUNDS OF APPEAL. 2. ASSESSEE-COMPANY,IS ENGAGED IN THE BUSINESS OF IN T HE BUSINESS OF MANUFACTURING OF CHEMICAL DYES AND INTERMEDIATES.DETAILS OF DATES OF FILING O F RETURNS, INCOMES RETURNED, DATES OF ASSESSMENT,ASSESSED INCOMES,DATES OF ORDERS OF THE CIT(A)CAN BE SUMMARISED AS UNDER : DT.OF FILING OF RETURN RETURNED INCOME (RS.) DATE OF ASSESSMENT ASSESSED INCOME DT. OF ORDERS OF CIT(A) AY-2007-08 24.10.2007 16,37,06,558/- 24.12.2009 16, 89,35,800/- 03.08.2010 AY-2008-09 19.09.2008 16,08,10,347/- 16.12.2010 16, 32,89,290/- 04.08.2011 ITA NO. 7495/MUM/2010 AY-2007-08 3 .DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AO FO UND THAT ASSESSEE HAD CLAIMED ADDITIONAL DEPRECIATION OF RS. 45,45,937/- ON THE MACHINERY PU RCHASED DURING THE AY 2006-07 @ 10%. HE DIRECTED THE ASSESSEE TO EXPLAIN AS TO WHY THE ADDI TIONAL DEPRECIATION AMOUNTING TO RS. 45.45 LACS SHOULD NOT BE DISALLOWED ON THE MACHINERY PURCHASED . VIDE ITS LETTER DATED 16.09.2009 ASSESSEE SUBMITTED THAT CLAIM ON DEPRECIATION WAS MADE AS PE R THE TAX REPORT. REFERRING TO SUB-SECTION 32(1)(IIA), AO HELD THAT INTENTION OF THE LEGISLATU RE WAS TO GRANT ADDITIONAL DEPRECIATION @ 20% ON THE NEW MACHINERY, THAT THE ADDITIONAL DEPRECIATION WAS TO BE ALLOWED IN THE YEAR OF PURCHASE ONLY, THAT IF THE MACHINERY WAS PURCHASED IN THE SECOND H ALF OF THE YEAR THE QUANTUM OF DEPRECIATION WAS TO BE ALLOWED ON PROPORTIONATE BASIS, THAT PROVISO INSERTED BY FINANCE ACT, 2002 WAS VERY CLEAR AND UNAMBIGUOUS TO GRANT DEDUCTION @ 50% OF THE AMOUNT CALCULATED AT THE PERCENTAGE PRESCRIBED. ACCORDINGLY, THE ADDITIONAL DEPRECIATION CLAIMED ON MACHINERY PURCHASED DURING THE AY 2006-07 WAS ALLOWED UPTO 10% ONLY AS THE MACHINERY WAS PURC HASED IN THE LATTER HALF OF THE YEAR. 4 .AGAINST THE ORDER OF THE AO ASSESSEE PREFERRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY (FAA). BEFORE HIM IT WAS SUBMITTED THAT U/S. 32(1)( IIA) ADDITIONAL DEPRECIATION WAS ALLOWABLE @ 20%, THAT THE MACHINERY WAS PURCHASED AFTER 01.10.2 005 IN THE AY 2006-07, THAT ONLY 10% ADDITIONAL DEPRECIATION WAS CLAIMED IN AY 2006-07, THAT BALANCE 10% WAS CLAIMED IN THE AY 2007-08, THAT WORD SHALL USE IN SECTION 32(1)(IIA) SIGNIFY THAT 20% DEDUCTION HAD TO BE ALLOWED FOR ADDITIONAL DEPRECIATION IN ANY CASE, THAT THE DEPRE CIATION PROVISIONS SHOULD BE INTERPRETED IN A LIBERAL MANNER.AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE. FAA HELD THAT IF MACHINERY WAS USED FOR LESS THAN 180 DAYS IN ANY PREVIOUS YEAR AD DITIONAL DEPRECIATION WAS TO BE ALLOWED @ 50% ONLY, THAT THE INTENTION OF THE LEGISLATURE WAS NOT TO ALLOW BALANCE 50% ADDITIONAL DEPRECIATION IN THE SUBSEQUENT YEAR, THAT ACT DOES NOT SPECIFICALLY PROVIDE FOR THE ADDITIONAL DEPRECIATION TO BE ALLOWED IN THE SUBSEQUENT AYS. 3 ITA NOS. 7495/MUM/2010 & 7126 MUM 2011 ANUSHAKTI CHEMICALS AND DRUGS LTD. 6. BEFORE US,AUTHORISED REPRESENTATIVE(AR)SUBMITTED TH AT ADDITIONAL DEPRECIATION, AS PER THE PROVISIONS OF SECTION 32(1)(IIA), HAS TO BE ALLOWED @ 20%, THAT ASSESSEE HAD CLAIMED ADDITIONAL DEPRECIATION @ 10% FOR THE YEAR UNDER CONSIDERATION AS THE MACHINERY WAS NOT USED FOR MORE THAN 180 DAYS, THAT BALANCE 10% DEPRECIATION WAS CLAIMED IN THE AY UNDER APPEAL, THAT ASSESSEE WAS ENTITLED TO CLAIM SUCH DEPRECIATION IF IT COULD NOT CLAIM THE DEPRECIATION @ 100% IN EARLIER AY. AR RELIED UPON THE ORDERS OF COSMO FILMS LTD. (139 ITD 628), SIL INVESTMENT LTD. (54 SOT 54), MITC ROLLING MILLS P. LTD.(ITA NO. 2789/MUM/2012).D EPARTMENTAL REPRESENTATIVE (DR) SUPPORT -ED THE ORDERS OF THE FAA. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US. WE FIND THAT SIMILAR ISSUE HAD BEEN DECIDED IN FAVOUR OF THE ASSESSEE IN THE CASE OF COSMO FILMS LTD.(SUPRA).WE WOULD LIKE TO REPRODUCE THE RELEVANT PORTION OF THE ORDER S. 13.IN GROUND NOS. 2 & 3,THE ISSUE INVOLVED IS AGAIN ST THE DISALLOWANCE OF ARREARS OF ADDITIONAL DEPRECIATION OF RS. 3,34,78,825/- AND NEGATING AN A LTERNATE CLAIM FOR DEDUCTION OF ADDITIONAL DEPRECIATION OF RS. 11,29,06,214/-. 14.THE ASSESSEE HAS CLAIMED ADDITIONAL DEPRECIATION DURING THE YEAR WHICH WAS NOT PERTAINING TO THE ADDITION TO THE FIXED ASSET DURING THE YEAR.THE CLAIM OF THE ASSESSEE WAS THAT THE ADDITIONS MADE DURING THE SECOND HALF OF THE FINANCIAL YEAR 2002-0 3 RELEVANT TO ASSESSMENT YEAR 2003-04, THE ADDITIONAL DEPRECIATION WAS CLAIMED ONLY ON 50% ON ALL THE ADDITIONS MADE AFTER 30TH SEPTEMBER, 2002. THE BALANCE 50% COULD NOT BE CLAIMED IN THAT ASSESSMENT YEAR ON ACCOUNT OF SECOND PROVISO TO SECTION 32(1)(II),HENCE THE SAME IS BEING CLAIME D DURING THIS YEAR AS IT WAS BALANCE OF THE ADDITIONAL DEPRECIATION. 17. WE HAVE HEARD BOTH THE SIDES ON THIS ISSUE. SEC TION 32(1)(IIA) INSERTED BY FINANCE (NO. 2) ACT, 2002 WITH EFFECT FROM 1.4.2003. IN SPEECH OF FINANC E MINISTER, THIS CLAUSE WAS INSERTED TO PROVIDE INCENTIVES FOR FRESH INVESTMENT IN INDUSTRIAL SECTO R. THIS CLAUSE WAS INTENDED TO GIVE IMPETUS TO NEW INVESTMENT IN SETTING UP A NEW INDUSTRIAL UNIT OR F OR EXPANDING THE INSTALLED CAPACITY OF EXISTING UNI TS BY AT LEAST 25%. THEREAFTER THESE PROVISIONS WERE A MENDED BY THE FINANCE (NO. 2) ACT OF 2004 W.E.F. 1.4.2005 AND PROVIDED THAT IN THE CASE OF ANY MACHI NERY OR PLANT WHICH HAS BEEN ACQUIRED AFTER THE 31ST DAY OF MARCH, 2005 BY AN ASSESSEE ENGAGED IN T HE BUSINESS OF MANUFACTURE OR PRODUCTION OF ANY ARTICLE OR THING, A FURTHER SUM EQUAL TO 15% OF ACTUAL COST OF SUCH MACHINERY OR PLANT SHALL BE ALLOWED AS DEDUCTION UNDER CLAUSE (II) OF SECTION 3 2(1). THIS ADDITIONAL ALLOWANCE U/S 32(1)(IIA) IS MADE AVAILABLE AS CERTAIN PERCENTAGE OF ACTUAL COST OF NEW MACHINERY AND PLANT ACQUIRED AND INSTALLED. THIS PROVISION HAS BEEN DIRECTED TOWARDS ENCOURAGING INDUSTRIALIZATION BY ALLOWING ADDITIONAL BENEFIT TO THE SETTING UP NEW INDUSTRIAL UNDERTAKINGS MAKING OR FOR EXPANSION OF THE INDUSTRIAL UNDERTAKING BY WAY OF MAKING MORE INVEST MENT IN CAPITAL GOODS. THUS, THESE ARE INCENTIVES AIMED TO BOOST NEW INVESTMENTS IN SETTIN G UP AND EXPANDING THE UNITS. X X X X X X X X X X X X X X X THUS, THIS INCENTIVE IN THE FORM OF ADDITIONAL SUM OF DEPRECIATION IS NOT AVAILABLE TO ANY PLANT OR MACHINERY WHICH HAS BEEN USED EITHER WITHIN INDIA O R OUTSIDE INDIA BY ANY OTHER PERSON OR SUCH MACHINERY AND PLANT ARE INSTALLED IN ANY OFFICE PRE MISES OR ANY RESIDENTIAL ACCOMMODATION, INCLUDING ACCOMMODATION IN THE NATURE OF A GUEST HO USE OR ANY OFFICE APPLIANCES OR ROAD TRANSPORT VEHICLES, OR ANY MACHINERY OR PLANT, THE WHOLE OF T HE ACTUAL COST OF WHICH IS ALLOWABLE AS DEDUCTION (WHERE BY WAY OF DEPRECIATION OR OTHERWISE) IN COMP UTING THE TOTAL INCOME UNDER THE HEAD 'PROFITS AND GAINS OF BUSINESS OR PROFESSION' OF ANY ONE PRE VIOUS YEAR. THUS, THE INTENTION WAS NOT TO DENY THE BENEFIT TO THE ASSETS WHO HAVE ACQUIRED OR INST ALLED NEW MACHINERY OR PLANT. THE SECOND PROVISO TO SECTION 32(1)(II) RESTRICTS THE ALLOWANCES ONLY TO 50% WHERE THE ASSETS HAVE BEEN ACQUIRED AND PUT TO USE FOR A PERIOD LESS THAN 180 DAYS IN THE Y EAR OF ACQUISITION. THIS RESTRICTION IS ONLY ON THE BASIS OF PERIOD OF USE. THERE IS NO RESTRICTION THA T BALANCE OF ONE TIME INCENTIVE IN THE FORM OF ADDITIONAL SUM OF DEPRECIATION SHALL NOT BE AVAILAB LE IN THE SUBSEQUENT YEAR. SECTION 32(2) PROVIDES FOR A CARRY FORWARD SET UP OF UNABSORBED DEPRECIATI ON. THIS ADDITIONAL BENEFIT IN THE FORM OF ADDITIONAL ALLOWANCE U/S 32(1)(IIA) IS ONE TIME BEN EFIT TO ENCOURAGE THE INDUSTRIALIZATION AND IN VIEW OF THE DECISION OF HON'BLE SUPREME COURT IN THE CAS E OF BAJAJ TEMPO LTD. (SUPRA), THE PROVISIONS RELATED TO IT HAVE TO BE CONSTRUCTED REASONABLY, LI BERALLY AND PURPOSIVE TO MAKE THE PROVISION MEANINGFUL WHILE GRANTING THE ADDITIONAL ALLOWANCE. THIS ADDITIONAL BENEFIT IS TO GIVE IMPETUS TO 4 ITA NOS. 7495/MUM/2010 & 7126 MUM 2011 ANUSHAKTI CHEMICALS AND DRUGS LTD. INDUSTRIALIZATION AND THE BASIC INTENTION AND PURPO SE OF THESE PROVISIONS CAN BE REASONABLY AND LIBERALLY HELD THAT THE ASSESSEE DESERVES TO GET TH E BENEFIT IN FULL WHEN THERE IS NO RESTRICTION IN T HE STATUTE TO DENY THE BENEFIT OF BALANCE OF 50% WHEN THE NEW PLANT AND MACHINERY WERE ACQUIRED AND USE FOR LESS THAN 180 DAYS. ONE TIME BENEFIT EXTEND ED TO ASSESSEE HAS BEEN EARNED IN THE YEAR OF ACQUISITION OF NEW PLANT AND MACHINERY. IT HAS BEEN CALCULATED @ 15% BUT RESTRICTED TO 50% ONLY ON ACCOUNT OF USAGE OF THESE PLANT & MACHINERY IN THE YEAR OF ACQUISITION. IN SECTION 32(1)(IIA), THE EXPRESSION USED IS 'SHALL BE ALLOWED'. THUS, THE AS SESSEE HAD EARNED THE BENEFIT AS SOON AS HE HAD PURCHASED THE NEW PLANT AND MACHINERY IN FULL BUT I T IS RESTRICTED TO 50% IN THAT PARTICULAR YEAR ON ACCOUNT OF PERIOD OF USAGES. SUCH RESTRICTIONS CANN OT DIVEST THE STATUTORY RIGHT. LAW DOES NOT PROHIBIT THAT BALANCE 50% WILL NOT BE ALLOWED IN SU CCEEDING YEAR. THE EXTRA DEPRECIATION ALLOWABLE U/S 32(1)(IIA) IN AN EXTRA INCENTIVE WHICH HAS BEEN EARNED AND CALCULATED IN THE YEAR OF ACQUISITION BUT RESTRICTED FOR THAT YEAR TO 50% ON ACCOUNT OF U SAGE. THE SO EARNED INCENTIVE MUST BE MADE AVAILABLE IN THE SUBSEQUENT YEAR. THE OVERALL DEDUC TION OF DEPRECIATION U/S 32 SHALL DEFINITELY NOT EXCEED THE TOTAL COST OF PLANT AND MACHINERY. IN VI EW OF THIS MATTER, WE SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND DIRECT TO EXTEND THE BENEFIT. WE ALLOW GROUND NO. 2 OF THE ASSESSEE'S APPEAL. WE FIND THAT IN THE CASE OF MITC ROLLING MILLS P. L TD.(SUPRA) TO WHICH ONE OF US WAS THE PARTY, IT WAS HELD THAT ASSESSEE WAS ENTITLED TO DEPRECIATION IN SUBSEQUENT YEAR, IF THE ENTIRE DEPRECIATION WAS NOT ALLOWED IN THE FIRST YEAR OF INSTALLATION OF MA CHINERY. SIMILAR VIEW WAS TAKEN BY THE DELHI BENCH OF TRIBUNAL IN THE CASE OF SIL INVESTMENT LTD .(SUPRA). RESPECTFULLY FOLLOWING THE ORDERS OF THE COORDINATI NG BENCHES,WE DECIDE GROUND NO.1 IN FAVOUR OF THE ASSESSEE. 8. GROUND NO.2 IS ABOUT DISALLOWANCE MADE U/S. 14A OF THE ACT. DURING THE ASSESSMENT PROCEEDINGS, AO FOUND THAT THE ASSESSEE HAD MADE INVESTMENT AT R S. 2.67 CRORES IN ITS GROUP CONCERNS, THAT THE ASSESSEE HAD NOT SHOWN TO HAVE EARNED ANY TAXABLE I NCOME FROM GROUP CONCERNS. HE HELD THAT INCOME LIKE, DIVIDEND IF ANY,RECEIVED BY THE ASSESS EE-COMPANY IN FUTURE FROM THE SISTER CONCERNS WERE EXEMPT FROM TAXATION.ACCORDINGLY, HE ALLOCATED PROPORTIONATE EXPENDITURE FOR EARNING INCOME TO BE DETERMINED U/S. 14A OF THE ACT R.W.RULE 8D OF THE INCOME TAX RULES, 1962 (RULES) AT RS. 6,83,301/-. 9 .ASSESSEE PREFERRED AN APPEAL BEFORE THE FAA. AFTER PERUSING THE SUBMISSIONS OF THE ASSESSEE AND THE ASSESSMENT ORDER, HE HELD THAT ASSESSEE DID NOT OFFER ANY DIVIDEND INCOME DURING THE YEAR UNDER APPEAL, THAT IT CLAIMED THAT NO EXPENDITURE WAS ATT RIBUTED FOR EARNING EXEMPT INCOME ON THE GROUND THAT INVESTMENT IN SHARES OF THESE COMPANIES HAD NO T YIELDED ANY INCOME DURING THE YEAR UNDER CONSIDERATION.REFERRING TO THE ORDER OF ITAT, SPECI AL BENCH, MUMBAI DELIVERED IN THE CASE OF DAGA CAPITAL MANAGEMENT (P.) LTD. (ITA NO. 8057/MUM/2003 ) HE UPHELD THAT ADDITION MADE BY THE AO. 10. BEFORE US,AUTHORISED REPRESENTATIVE (AR) SUBMITTED THAT RULE 8D WAS NOT APPLICABLE IN THE AY-2007-08, THAT ASSESSEE HAD NOT CLAIMED ANY EXPEN DITURE WITH RELATION TO EXEMPT INCOME. HE REFERRED TO PAGE NO. 2 OF THE PAPER BOOK. HE RELIED UPON THE CASES OF GUJARAT STATE FERTILIZERS AND CHEMICALS LTD.(358 ITR 323), SHOPPERS STOP LTD. ( ITA NO. 1448 & 4475/MUM/2010- AY 2006- 07 & 2007-08 DATED 30.08.2011, STRIDES ARCOLAB LTD. (138 ITD 323), WEIZMAN LTD. (ITA NO. 4751/ MUM/ 2010-AY 2006-07 DATED 21.08.2011. DEPARTMENTAL REPRESENTATIVE (DR) SUPPORTED THE ORDER OF THE FAA.WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US. IT IS A FACT THAT ASSESSEE HAD NOT CLAIMED ANY EXEMPT INCOME IN THE Y EAR UNDER CONSIDERATION. IN OUR OPINION PROVISIONS OF SECTION 14A WERE APPLICABLE IN THAT Y EAR AND AO WAS ENTITLE TO MAKE DISALLOWANCE. BUT, HE SHOULD NOT HAVE INVOKED THE PROVISIONS OF R ULE 8D. WE ARE OF THE OPINION THAT IN THE INTEREST OF JUSTICE, MATTER SHOULD BE REMITTED BACK TO THE FILE OF THE AO FOR FRESH ADJUDICATION. APPEAL FILED BY THE ASSESSEE IS ALLOWED.IN PART. ITA NO.7126/MUM/2011 AY-2008-09 11. GROUND NO.1 IS ABOUT DISALLOWANCE OF THE ADDITIONAL DEPRECIATION U/S. 32(1)(IIA) OF THE ACT. FOLLOWING OUR ORDER OF THE EARLIER YEARS, WE DECIDE THE ISSUE IN FAVOUR OF THE ASSESSEE, AS THE FACTS 5 ITA NOS. 7495/MUM/2010 & 7126 MUM 2011 ANUSHAKTI CHEMICALS AND DRUGS LTD. OF THE CASE ARE SIMILAR TO THE FACTS OF THE PRECEDI NG YEAR. GROUND NO.1 IS ALLOWED IN FAVOUR OF THE ASSESSEE. 12. NEXT GROUND IS ABOUT DISALLOWANCE MADE U/S. 14A OF THE ACT. WE ARE AWARE THAT PROVISIONS OF RULE 8D OF THE ACT WERE APPLICABLE DURING THE YEAR UNDER CONSIDERATION BUT FOR INVOKING THEM SATISFACTION HAS TO BE RECORDED BY THE AO. WE FIND THAT SUCH EXERCISE HAS NOT BEEN DONE BY HIM. FOLLOWING ORDER OF THE LAST AY, WE REMIT BACK THE I SSUE OF DISALLOWANCE TO BE MADE, IF ANY, U/S. 14A R.W. RULE 8D OF THE RULES FOR FRESH ADJUDICATIO N. GROUND NO.2 IS ALLOWED FOR STATISTICAL PURPOSES. APPEAL OF THE ASSESSEE IS ALLOWED IN PART. AS A RESULT, APPEALS FILED BY THE ASSESSEE FOR BOTH THE AYS. STAND PARTLY ALLOWED. 2*3 #)* 4 5 , 0 /#6 $7 , 8 1*3 9 , * :;. ORDER PRONOUNCED IN THE OP EN COURT ON 19 TH FEBURARY,2014 . 1 , ./$ 8 =# 19 2- 2- 2- 2- , 201 4 / , 0 > SD/- SD/- ( ! ! ! ! / VIVEK VARMA) ( / RAJENDRA) / JUDICIAL MEMBER /ACCOUNTANT MEMBER / MUMBAI, =# /DATE: 19 TH FEBUARY,2014. SK 1 1 1 1 , ,, , '*! '*! '*! '*! ?!$* ?!$* ?!$* ?!$* / COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE / %& 2. RESPONDENT / '(%& 3. THE CONCERNED CIT (A) / @ A , 4. THE CONCERNED CIT / @ A 5. DR A BENCH, ITAT, MUMBAI / !B0 '*# , ,, , , . . . 6. GUARD FILE/ 0 2 (!* (!* (!* (!* '* '*'* '* //TRUE COPY// 1# / BY ORDER, C / : DY./ASST. REGISTRAR , /ITAT, MUMBAI