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2018 (7) TMI 1082 - AT - Income TaxDisallowance of interest - Held that:- On perusal of the balance sheet filed before us, we find that the assessee has not taken any fresh loan during this year and has earned profit of ₹ 34.00 crores approx. Therefore, no adverse inference can be drawn that these capital work in progress incurred by the assessee amounting to ₹ 1,00,61,241/- has been expended out of borrowed funds. The Revenue could not adduce any evidence that this amount has been incurred out of any borrowed funds. Claim of depreciation on sale proceeds of the assets - Held that:- Once, the asset has been taken in the block of assets, and if any sale value of the asset is realized or credited into the fixed asset account, it is reduced from the block of assets and it cannot be treated as a profit on sale of asset until and unless whole of the block does not exhaust. Therefore, ground No. 4 for the assessment years 2010-11 and 2011-12 are dismissed. Calculation of interest on the loans outstanding as on 31.03.2011 - Held that:- AR did not agree to produce the requisite balance sheet, only stating that the issue is covered by the decision of Tribunal and Hon’ble High Court. We are, therefore, unable to ascertain whether the loans given by the assessee during the year under consideration were out of owns funds or from borrowed funds. Therefore, we deem it expedient in the interest of justice that this matter should go back to the file of the AO to decide the issue afresh after due verification, as observed above from the books of assessee. Similar is the position with respect to the disallowance of interest made by A.O. of ₹ 26,86,443/- on the expenditure incurred by assessee as capital work in progress of ₹ 2,23,87,021/-. This expenditure also needs verification to the extent whether this amount was expended by the assessee out of own funds or out of borrowed funds. Therefore, this issue is also sent back to the Assessing Officer for deciding the same afresh after due verification.
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