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2013 (8) TMI 298 - AT - Income TaxDeduction u/s 80IB - Small scale industry - Held that:- There is no condition that new definition of small scale industry is applicable to the new units only - Amount of investment has to be seen as on the last date of previous year - last date of the preceding year is 31.3.2007 and the new limit of Rs. 5.00 crore was applicable from 2.10.2006. Therefore, as on 31.3.2007 the assessee was clearly covered by the new definition - Decided against Revenue. Capital expenditure - Disallowance of Expenditure on machines - Spare part or machine itself - Held that:- Certificate from professional state that TUP is a wearable and Breakable part and it require replacement is case of excess wear and breakage. It has got no link in the increase of capacity of Drop Hammer - Assessing Officer’s conclusion is not based upon any specialized knowledge of the production process or any thing to suggest that he spare parts were actually a machine by itself - No other material has been brought to show by the revenue that the TUP is not a spare part - Decided against Revenue. Disallowance of interest - Interest paid at higher rate to person u/s 40A(2)(b) - CIT deleted addition - Held that:- funds borrowed from bank and financial institutions are subject to number of restrictions and are more than secure whereas money borrowed from the relatives was unsecured and generally interest rate is more in case of unsecured loans - Decided against Revenue. Disallowance of expenses u/s 14A - Held that:- the disallowance u/s 14A is based on Rule 8D which has been noted was applicable during the year under consideration and which is in consonance with the decision of Hon'ble Bombay High Court. - Decided in favor of revenue. Disallowance of interest on advances given for capital assets - Held that:- after 1.4.2004 if the interest expenditure has been incurred for the purpose of acquisition of capital asset then the same is not allowable. Since the advances have been made admittedly for the purpose of acquisition of capital asset i.e. land, building etc. interest incurred for acquisition of such asset is not allowable. - Decided in favor of revenue.
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