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2012 (5) TMI 318 - AT - Income TaxDisallowance of interest - capitalization - Explanation 8 to sec. 43(1) - business from a rented premises - held that:- Through this ground, the assessee is contending that if deduction of interest amounting to Rs. 6.57 lakhs is not allowed, then such amount should be allowed to be capitalized to the cost of office/godown and depreciation may be allowed on the same. We accept this ground partly to the extent of allowing capitalization of this amount of interest to the cost of office/godown. However, we are not inclined to grant any depreciation on it for the reason that the said office and godown have not admittedly been put to use for the current year. This additional ground is, therefore, partly allowed. Unaccounted sale - shortage in goods - held that:- The return for the said assessment year 2004-05 was scrutinized by the AO and assessment order was passed u/s. 143(3). Page no. 161 to 164 of the paper book is a copy of the assessment order for assessment year 2004-05, from which it can be seen that no addition on account of shortage was made. Thus, it becomes evident that the shortage of 2.93% has been accepted by the Revenue for the assessment year 2004-05. In that view of the matter, there is no reason to reject lower net shortage of 2.17% for the current year. In view of the foregoing reasons, we are of the considered opinion that the authorities below were not justified in making and sustaining the addition of Rs. 29.22 lakhs on this count, which is hereby ordered to be deleted. These grounds are, therefore, allowed.
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