Shri George Mathan, J.M:— ITA No. 517.Kol/2012 is an appeal filed by the revenue against the order of the learned Commissioner of Income-tax (Appeals)-1, Kolkata in appeal No. 208.CIT(A)-I/R-3/10-11 dated 11-01-2012 for the assessment year 2008-2009 and the C.O No. 46.Kol/2012 is a cross objection filed by the assessee in the revenue's appeal in ITA No. 517.Kol/2012 for the assessment year 2008-2009
2. Shri S.P Lahiri, learned CIT/Sr. DR represented on behalf of the revenue and Shri S.K Tulsiyan, Advocate, learned AR represented on behalf of the assessee.
3. In the revenue appeal in ITA No. 517.Kol/2012 for the A.Y 2008-2009, the revenue has raised following grounds of appeal:—
1. That on the facts and circumstances of the case, the Ld. CIT(A) erred in deleting the addition of Rs. 4,17,28,868/- made by the Assessing Officer on the ground of additional depreciation without appreciating the fact that the case of the assessee falls under clause (i) of sub-section (1) of Section 32 for which there is no additional depreciation available in clause(iia) of sub-section (1) of Section 32 of the I.T Act 1961.
2. That the CIT(A) has erred in deleting the addition of Rs. 4,17,28,868/- on the ground of additional depreciation without appreciating the facts that the assessee has not exercised the option available as per second provision of rule 5 before due date for furnishing return of income under sub-section (1) of Section 139 of the Income-tax Act, 1961 and has claimed depreciation on actual cost i.e on straight line method and therefore, the case of the assessee comes under clause (i) of sub-section (1) under section 32 for which there is no additional depreciation available.
3. That Ld. CIT(A) has erred in allowing deduction u/s. 35D on Rs. 28,78,839/- & Rs. 35,000/- which are professional fees as per findings of the AO.
4. That in doing so, Ld. CIT(A) has admitted fresh evidence in the form of copy of agreement and copy of bill in violation of Rule 46A(3).
That, otherwise also, Ld. CIT(A) has allowed excess deduction u/s. 35D, which is limited to 2.5% of the capital employed or cost of the project as per provisions of sub-section (3) of Section 35D
4. In C.O No. 46.Kol/2012 [ITA No. 517.Kol/2012 A.Y 2008-2009], the assessee has raised following ground:—
1. On the facts and in the circumstances of the case, the Ld. CIT(A) erred in holding that the A.O had rightly disallowed the Service Tax payments by relying upon the judgment of the ITAT, Chennai Bench, in the case of Real Image Technologies Pvt. Ltd. [(2008) 114 ITD 573 (Chennai)] and in that view, in sustaining the disallowance of Rs. 9,20,997/- being Service Tax paid during the year.
5. In regard to ground Nos. 1 & 2 of revenue's appeal, it was submitted by the learned CIT/Sr. DR that in the course of assessment the AO had disallowed the claim of additional depreciation made by the assessee in respect of power plant. It was the submission that the AO was of the view that as depreciation having been allowed to the assessee u/s. 32(1)(i) of the Act, additional depreciation u/s. 32(1)(iia) was not available in so far as additional depreciation u/s. 32(1)(iia) of the Act was allowable only u/s. 32(1)(ii). It was the submission that the Ld. CIT(A) had wrongly allowed the assessee's claim of additional depreciation by relying upon the decisions of the Hon'ble Madras High Court in the cases of Commissioner Of Income Tax, Madurai v. M/S. Vtm Limited reported in (2009) 319 ITR 336, CIT v. Hi-Tech Arai Limited reported in (2010) 321 ITR 477 and Commissioner Of Income-Tax v. Texmo Precision Castings reported in (2010) 321 ITR 481 (Mad.). He has vehemently supported the order of the AO.
6. In reply, the learned AR for the assessee has submitted that the issue was squarely covered by the decisions of the Hon'ble Madras High Court in the cases of CIT v. Hi-Tech Arai Limited reported in (2010) 321 ITR 477 (Mad.), Commissioner Of Income Tax, Madurai v. M/S. Vtm Limited reported in (2009) 319 ITR 336 (Mad.) and Commissioner Of Income-Tax v. Texmo Precision Castings reported in (2010) 321 ITR 481 (Mad). It was the further submission that the amendment to section 32(1)(iia) in 2012 to include power generation plant was clarificatory in nature and this also supported the claim of the assessee that, electricity being an article or thing manufactured by the assessee with the use of power generation plant, such plant was entitled to additional depreciation.
6.1 On a specific query to the learned Sr. DR by the bench as to whether there was any contrary decision to the decisions of the Hon'ble Madras High Court, which has been relied upon by the Ld. CIT(A) for deleting the additions, the learned Sr. DR replied in negative.
7. We have considered the rival submissions. A perusal of the order of the ld. CIT(A) more specifically in paras 4.3 to 4.5 of his order clearly shows that the ld. CIT(A) has relied upon the decisions of the Hon'ble Madras High Court in the cases of Hi-Tech Arai Limited, VTM Limited Texmo Precision Castings (refer to supra) for the purpose of holding that the assessee is eligible for additional depreciation as per provisions of section 32(1)(iia) of the Act. In the absence of any decision to the contrary much less any decision of the Hon'ble Jurisdictional High Court on the issue to the contrary, we are of the view that the order of the ld. CIT(A) on this issue is on a right footing and does not call for any interference, in so far as he has followed the judicial discipline in following the decisions of the Hon'ble Madras High Court (refer to supra) and granted the relief to the assessee. In the circumstances, we find no reason to interfere with the order of the Ld. CIT(A) in doing so. Consequently, the ground Nos. 1 & 2 of the revenue's appeal stand dismissed.
8. In regard to ground Nos. 3 and 4, it was the submission by the learned Sr. DR that the issue was against the action of the ld. CIT(A) in allowing deduction u/s. 35D by admitting fresh evidences in the form of copy of agreement and copy of bill in violation of Rule 46A(3) of the I.T Rules 1962. The learned Sr. DR drew our attention to page 20 of the order of the ld. CIT(A), wherein in para 7.2 clauses 3.1 and 3.2 the ld. CIT(A) has recognised a copy of underwriting agreement enclosed at pages 85-125 of the assessee's paper book and copy of bill from Mr. R.K Kothari enclosed at page 126 of the assessee's paper book. It was the submission that these evidences were not before the AO.
9. In reply, the learned AR for the assessee has submitted that fact that the AO was able to quantify the figures in para 4.9 of the assessment order, clearly shows that all the papers were before him. It was the further submission that the genuineness of expenditure is not disputed. The AO has only made an adhoc disallowance @1/5 of the expenditure by holding that the same fell within the category of capital expenditure. It was the submission that the ld. CIT(A) has deleted the adhoc disallowance on the ground that the same was not capital expenditure. It was the submission that the order of the ld. CIT(A) on this issue was liable to be upheld.
10. We have considered the rival submission. A perusal of the order of the ld. CIT(A) clearly shows that the ld. CIT(A) has deleted the disallowance by holding that the payments are in the nature of expenditure for underwriting commission and brokerage paid for certification fees allowable under section 35D of the Act. Admittedly, the fact that the AO is able to extract the figures in paras 4.8 and 4.9 of his order would clearly show that all the papers were before the AO. Further, no affidavit has been filed before the tribunal under Rule 11 of the I.T Rules nor the revenue has been able to substantiate that such evidences were not before the AO by production of any record. In the circumstances, we are of the view that the finding of the Ld. CIT(A) on this issue is on a right footing and does not call for any interference. The ground Nos. 3 & 4 of the revenue's appeal stand dismissed.
11. In the circumstances, the revenue's appeal in ITA No. 517.Kol/2012 for the A.Y 2008-2009 stands dismissed.
12. In the Cross Objection, it was submitted by the learned AR for the assessee that service tax has been paid before the due date as provided u/s. 43B of the I.T Act 1961. Consequently, the same is liable to be allowed.
13. In reply, the learned Sr. DR has vehemently supported the order of the AO.
14. We have considered the rival submissions. Admittedly, the provisions of section 43B of the Act applies to payment of service tax. It is noticed that service tax along with interest for an amount of Rs. 9,20,997/- has been paid on 5-12-2007 as per challans. The service tax relates to assessment year 2007-2008, which has been paid during the assessment year 2008-2009. Consequently, in view of the provisions of section 43B of the Act as the service tax is paid on 5-12-2007, the same is liable to be allowed in computing the total income for the assessment year 2008-2009. Consequently, the AO is directed to grant the assessee the benefit of deduction u/s. 43B of the Act towards service tax paid by the assessee to the extent of Rs. 9,20,997/-. Accordingly, the cross objection filed by the assessee stands allowed.
15. In the result, the revenue's appeal in ITA No. 517.Kol/2012 for the assessment year 2008-2009 stands dismissed and cross objection of the assessee in C.O No. 46.Kol/2012 for the assessment year 2008-2009 stands allowed as stated above.