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2015 (1) TMI 1461 - ITAT AHMEDABADDepreciation related to Multi Metal Project - Disallowance of claim as project not actually used in year - Assessee's claim is that even though machines in the Multi Metal Project were not actually used during the year, still claim of depreciation is allowable since the machineries were put in a condition ready to use - CIT-A deleted disallowance - HELD THAT:- CIT(A) has followed its decision for A.Y. 1997-98 to 2000-01 and Tribunal in [2013 (9) TMI 520 - ITAT, AHMEDABAD] has decided the similar issue in favour of assessee - so following the same reasoning, we are not inclined to interfere in the finding of CIT(A) who has deleted the disallowance on account of depreciation related to Multi Metal Project. Disallowance on account of prior period charges - HELD THAT:- As decided in own case [2013 (9) TMI 520 - ITAT, AHMEDABAD] A.O. has not given this finding that the expense did not crystelise during the present year. Therefore, in our considered opinion, this fact has to be brought out on record as to whether the expenses in question have crystalised during this year and if the assessee is able to do so, no disallowance should be made. The A.O. should pass necessary order as per law. Disallowance of alternative claim of assessee to tax only interest portion of lease rental by disallowance of depreciation on assets leased to Gujarat State Road Transport Corporation ("GSRTC') - HELD THAT:- As decided in own case [2013 (9) TMI 520 - ITAT, AHMEDABAD] we are not inclined to interfere in the finding of CIT(A), who has directed the Assessing Officer to tax the interest portion out of lease rentals offered as income by assessee. Same is uphold. Disallowance u/s 14A - HELD THAT:- No disallowance of interest expenses is required because revenue is expected to establish a nexus between interest bearing funds borrowed and these invested by the assessee. In such situation, disallowance u/s. 14A of Act is not justified. Assessing Officer is directed accordingly. Accordingly appeal of revenue on this issue is dismissed. Disallowance being expenditure of lignite project at Mata no Madh holding it to be preoperative expenses - HELD THAT:- As decided in own case [2013 (9) TMI 520 - ITAT, AHMEDABAD] issue decided in favour of assessee. Expenditure on power project at Akri Mota and further rejecting the claim of interest and financial charges forming part of total expenditure being not allowable u/s. 36(1)(iii) - HELD THAT:- As decided in own case [2013 (9) TMI 520 - ITAT, AHMEDABAD] borrowed funds were not used for setting up of a new unit of an existing running business but it was setting up of a new unit for production of an altogether new product i.e. power whereas the existing business of the assessee was production of lignite. Since this aspect is not fulfilled in the present case, even interest expenditure is not allowable in the present case u/s. 36(1)(iii) because in the present case, the product to be manufactured by the new unit is an altogether new product. Facts being similar, so following the same reasoning, we are not inclined to interfere in the order of CIT(A) who has held that in view of admitted factual position that Akri Mota Power project is not extension of its existing business. This is the first power project being put by assessee. It is undisputed that assessee did not have any business of power generate in earlier. In the light of above, factual legal discussion has been done in above assessee's appeal, we are not inclined to interfere in the finding of CIT(A) who has confirmed the disallowance - Decided against assessee. Disallowance being salary to staff at residence of Chairman - HELD THAT:- As decided in own case [2013 (9) TMI 520 - ITAT, AHMEDABAD] disallowance is not justified. If the expenditure is incurred in violation of the guidelines of Government of Gujarat and against Article 192 of the assessee corporation then the remedy lies somewhere else and action can be taken as per law against the person responsible for such violation but this cannot be the basis for making disallowance of expenses without proving that it is not for the purpose of assessee's business. This is not the claim of the revenue that this expenditure is not for the purpose of business and therefore, this disallowance is deleted. This ground of the assessee is allowed. Addition of miscellaneous income of Assessee's claim was miscellaneous income should be set off against expenditure - HELD THAT:- In the present case, we find that when the A.O. made this addition, there is no discussion as to whether these two incomes were directly connected or incidental to construction of plant by the assessee or not. In the order of Ld. CIT(A) also, there is no finding on this aspect of the matter. Before us also, although reliance was placed by the Ld. A.R. on these two judgements of Hon'ble Apex Court BONGAIGAON REFINERY [2001 (7) TMI 4 - SUPREME COURT] and BOKARO STEEL LIMITED [1998 (12) TMI 4 - SUPREME COURT] but this fact is not available on record as to whether the income in question were directly connected and incidental to construction of plant by the assessee or not. Under these facts, and in the interest of justice, we feel that this issue should go back to the file of the A.O. for a fresh decision.
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