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2013 (8) TMI 440 - ITAT CHENNAIDisallowance u/s 14A - Expenses incurred for earning exempt income - CIT granted partial relief - Held that:- The appellant had sufficient own funds and internal accruals to meet its investments. The share capital was ₹ 2,55,04,750/- and the set apart as prepaid costs and could not be allowed as expenditure for the year. He arrived the value of such prepaid cost at ₹ 4,93,170/- and disallowance the same as it was not incurred wholly and exclusively in respect of the business carried on during the year. He also stated that the addition was agreed to by the authorized representative of the assessee - Decided against assessee. Disallowance of repairs and replacements - CIT allowed deduction u/s 37(1) - Held that:- repairing and replacing the existing components of portion of the buildings, furniture and buildings cannot at all be stated to be of enduring nature but such expenditure would fall in the category of revenue expenditure allowable as deduction under sec.37 of the I.T. Act - Following decision of CIT v. Ooty Dasaprakash [1998 (2) TMI 77 - MADRAS High Court] - Decided in favour of assessee. Disallowance of annual maintenance charges - Revenue or capital expenditure - Held that:- Disallowed the expenses which pertained to the subsequent period. The rule of taxation rests on the matching principle in which cost incurred to earn revenue is recognized as expense in the period when related revenue is recognized as earned. The A.O. has rightly applied the matching principle and the portion of AMC expenses which does not relate to the maintenance costs for the year was rightly disallowed - Decided against assessee. Deduction under sec. 80IA - CIT granted deduction - Held that:- whether initial assessment year in section 80-IA(5) would only mean the year of commencement and not the year of claim ? - Unabsorbed depreciation - Held that:- Assessee has been setting off the loss against the income of the company for the earlier years. During the assessment year, the assessee exercised the option claim of deduction under section 80-IA of the Act. But the Assessing Officer denied the exemption on the finding that loss or depreciation already allowed and set off against other sources of the income of the assessee has to be notionally carried forward and set off against the current year's income from the units for which the assessee is claiming deduction under section 80-IA. There is no dispute that during the year, there is a profit. Therefore, the assessee claimed deduction under section 80-IA and the Revenue has no authority to notionally bring forward the unabsorbed depreciation and loss of the earlier year which has been already set off as against the current year profit from the unit - Following decision of Velayudhasamy Spinning Mills P. Ltd v. ACIT [2010 (3) TMI 860 - Madras High Court] - Decided in favour of assessee.
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