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2014 (2) TMI 237 - MADRAS HIGH COURTComputation of LTCG - additions towards car parking spaces allotted - Accrued rights to provide air conditioning equipment – Held that:- The assessee had no freedom to transfer the right, title and interest over the car parking spaces and that the benefit of privilege granted was only personal which could not be transferred to any third party for consideration – even the addition was only an estimate without any legal or factual basis - there was no reason to interfere with the well-reasoned order of the appellate authority in deleting the said notional additions of income and that the Tribunal committed no error in confirming the order of the appellate authority - There was no right to transfer the car park rights which have accrued in favour of the assessee and merely open space was being utilized beyond the permissible FSI for parking of vehicles - the notional additions on account of provision for air-conditioning does not arise in the facts of the present case as no such provision was actually provided by the developer – Decided against Revenue. Indexation benefit to the cost of improvement - Compensation paid to the tenants for vacating possession – Held that:- The compensation paid to the tenants for delivering the vacant possession, improved the right and interest of the assessee over the property, thus, it would amount to improvement cost – there was no erroneous approach or infirmity in the findings of the appellate authority and the Tribunal that the compensation paid to tenants for getting vacant possession would amount to cost of improvement and that the assessee was entitled for indexation benefit on that account - Relying upon Radhasoami Satsang Versus Commissioner of Income-Tax [1991 (11) TMI 2 - SUPREME Court] - section 48(ii) provides for deduction towards "costs of any improvement" – thus, compensation was paid to the tenants to obtain vacant possession so that the property could be put to better use and construct the building for which an agreement was entered into with the developer – hence it would constitute a "cost on improvement" as the said cost is incurred only for beneficial utilisation of the property – Decided against Revenue. Bogus Loss - Disallowance on sale of shares - Reversal of assessment – Held that:- There was no convincing material put forth by the Revenue to establish that the assessee was claiming loss on ostensible sale of shares belonging to the group companies with the motive of tax avoidance - all the required primary evidence relating to sale of shares were produced before the assessing authority and that the assessing authority did not point out any infirmity in those evidence – there was no infirmity in the order passed by the Tribunal confirming the order of the appellate authority directing the assessing authority to assess the loss on sale of shares under the head "Long-term capital gains" - The Tribunal has analysed the materials on record to come to a conclusion that the loss on account of sale of shares was a genuine and that the said loss has occurred in the course of business and cannot be added to the income of the assessee in any manner - the Revenue has failed to demonstrate as to how the loss on account of sale of shares is not genuine but a colourable device – Decided against Revenue. Interest paid on borrowed capital u/s 36(1)(iii) of the Act – Held that:- The appellate authority and the Tribunal found that the investment made in shares by the assessee by utilising borrowed capital was for strategic business purposes because the companies were promoted as special purpose companies to strengthen and promote its existing business by combining different business segments, thus, the claim was fully allowable under section 36(1)(iii) - the Revenue did not adduce any material to show that the borrowed capital was utilised by the assessee for non-business purposes - The appellate authority was correct in allowing the claim of the assessee and deleting the disallowance made by the assessing authority - the Tribunal in correct appreciation of the matter had in turn confirmed the finding of the appellate authority – Decided against Revenue. Licence fee to be deducted as business allowance – Held that:- the expenditure incurred by the respondent assessee towards licence fee payment were relatable to the business expediency and profits of the respondent-assessee and that the benefits availed of by the respondent-assessee from the service of the group resource company was tangible and justified – Decided against Revenue.
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