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2011 (3) TMI 1027 - AT - Income TaxDisallowed - depreciation on the power plants as per the cost of acquisition of the assets - Provisions of section 47, 47A, section 2(47)(v) or (vi) and section 32, held that transaction in the present case has to be treated as transfer and the transferor company is liability to pay capital gains tax - In the hands of the transferee, the cost of asset regarding exemption u/s 47(iv) cannot be given and the same has to be treated as withdrawn u/s 47A of the Act and the cost of assets in the hands of the transferee shall be cost for which the assessee company acquired - Since the assessee company seized to be a subsidiary of transferor company, provisions of section 47(iv) will not apply and therefore the transaction in the hands of the assessee company has to be treated as transfer at the cost at which it had acquired the asset - The assessee gets the relief accordingly. Interest earned on the deposits and advances - The interest expenditure paid in respect of capital borrowed for acquisition of an asset for extension of the existing business or profession was allowable as revenue expenditure but by the proviso inserted w.e.f. 1.4.2004 by the Finance Act, 2003, such interest paid in respect of capital borrowed for acquisition of asset for the extension of existing business or profession shall not be allowable for any period beginning from the date on which capital was borrowed for acquisition of the asset till the date on which such asset was first put to use - Admittedly, the dominant purpose for the loan taken was for the extension of the existing business by way of setting up a new power generation plant at Bhilai - Since assessee had been denied the benefit by inserting a specific proviso to section 36(1)(iii), therefore, matching principle shall help assessee - Hence, set aside the order of the CIT (A) on this issue and restore the order of the Assessing Officer.
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