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2016 (7) TMI 1001 - ITAT BANGALOREDepreciation claim on leasehold property disallowed - Held that:- Right of enjoyment to immovable property under a lease is immovable property within the meaning given in sec.103 of the Transfer of Property Act. Under sec.105 of the Transfer of Property Act, a lease creates a right or an interest in the enjoyment of the land property.Having referred to the above legal position, we hold that by virtue of lease only an interest in land is created which does not qualify for allowance e of depreciation. Considering the alternative claim of the assessee-company that the cost incurred on development of commercial space given to STPI should be allowed as a revenue expenditure, as mentioned above, the expenditure is incurred for acquiring interest in the land which is capital in nature. Therefore, the question of allowing it as revenue expenditure does not arise at all. Hence, this ground of appeal filed by the assesseecompany is dismissed. Disallowance made under the provisions of sec.14A - Held that:- AO, taking note of the negative balance in the bank, after making investment in mutual funds, inferred that borrowed funds were utilized. However, it is settled proposition of law that where common pool of funds were utilized for making investment should be inferred that investments are out of own funds. The AO has not rendered any finding whether the claim of the assessee is incorrect. When the assessee-company had not incurred any expenditure, the question of disallowance u/s 14A does not arise as per law laid down by the Hon’ble Karnataka High Court in the case of Canara Bank vs. Asst.CIT (2014 (6) TMI 929 - KARNATAKA HIGH COURT ). Therefore, this ground of appeal is remitted back to the file of the AO for fresh adjudication in accordance with law.
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