| Friday, May 13, 2011 |
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1. COMMISSIONER OF INCOME-TAX, WEST BENGAL-III, CALCUTTA Vs. M/S. E.I.H. LIMITED, HIGH COURT AT CALCUTTA, I.T.A. NO. 3 OF 2001, JUDGMENT ON: 31ST MARCH, 2011 “a) Whether on the facts and in the circumstances of the case the Ld. Tribunal has erred in law in confirming the deletion of disallowance of Rs.1,54,875/- on account of gifts when the tax audit report of the assessee has stated that the same is disallowable under Rule 6B of the I.T. Rules and that it is clearly covered by Section 37(2) of the I.T. Act, 1961.” Rule 6B of the Income-Tax Rules deals with the ‘expenditure on advertisement’ and undisputedly on those gifts the name or logo of the assessee was not used and, therefore, in our view, the Commissioner of Income-Tax (Appeals) and the Tribunal rightly gave deduction of the said amount as business expenditure within the meaning of Section 37 of the Act. “b) Whether on the facts and in the circumstances of the case the Ld. Tribunal has erred in law in confirming the deletion of disallowance of Rs.3,04,89,602/- on account of depreciation of new aircraft when it was not put to use in contravention to provisions of Section 32 of the I.T. Act, 1961.” Phrase “used for the purpose of business” should be interpreted to mean that such plant or machinery must be “open to use” for business and the proof of actual user is not necessary. For instance, if a person starts business and purchases various types of machinery for the purpose of the said business with a plan for manufacturing different types of articles but for want of demand from its customers for manufacture of a particular type of articles in a particular Assessment Year, if any particular machinery which is utilized for manufacture of that particular type of article is not actually used, the assessee should nevertheless be entitled to the benefit of depreciation notwithstanding the fact that such particular machinery was not at all used for the simple reason that the assessee made it ready for use but could not use for no fault on his part and over which he had no control. In the case before us, it has been established that the said aircraft was purchased for the business in the latter half of the Assessment Year and thus, the assessee became the owner and it was actually delivered to the assessee and landed at the New Delhi Airport Authority and the same was also made ready for use by insuring the same by the concerned insurance company. Thus, the assessee has proved that it was made ready for the use of business. In such a case, the authority below rightly granted depreciation @ 50% for the part use of the said aircraft in accordance with law. (Please Click here for judgment)
2. M/S COOL BREEZE AIRCON PVT. LTD. VS. INCOME-TAX OFFICER WARD 3(4) NEW DELHI, ITAT DELHI BENCH ‘B’, ITA NO. 4189(DEL)/2010, ORDER PRONOUNCED ON 6TH MAY, 2011 Merely because the audit report contains some additional words, which were not required as per prescribed form no. 3CA, the inclusion of these words does not lead to a conclusion that the audit report was not obtained and filed. Accordingly, Levy of penalty u/s 271B was not justified. (Please Click here for judgment)
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