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2013 (9) TMI 363 - AT - Income TaxExemption u/s 10(23G) – infrastructure capital company - exemption of interest income - investment in bonds of SSNNL and GIPCL - Held that:- Following Gujarat Power Corpn. Ltd. Versus ACIT [2010 (11) TMI 626 - ITAT, Ahmedabad] and VBC Ferro Alloys Ltd. v. Asst. CIT 2005 (9) TMI 253 - ITAT HYDERABAD-B] - Explanation 2 to section 10(23G), as introduced by the Finance Act, 1999 was declaratory and had to be construed as retrospective as it was retroactive in nature - Therefore, the assessee was entitled to exemption u/s. 10(23G) in respect of the investments made prior to 1-6-1998 - the assessee was entitled to exemption under section 10(23G) of the Income-tax Act - there was no reason to take a contrary view in the present year - Decided in favour of assessee. Disallowance u/s 35E – extraction and production of mineral - Held that:- No serious argument was made regarding eligibility of the assessee for deduction under section 35E and a clear finding was given by the authorities below that the assessee was not eligible for deduction under section 35E because the assessee had not fulfilled the required conditions - the learned authorised representative could not controvert these findings of the authorities below and hence, the aspect was decided against the assessee - the only argument raised was that deduction should be allowed under section 37(1) of the Income-tax Act - No deduction was allowable in the present year because even if the expenditure were to be debited in the profit and loss account, the same had to be considered in the credit side of the profit and loss account also as closing stock of work-in-progress and there will be no resultant deduction in the present year – there was no merit in this ground of the assessee - Decided against Assessee. Disallowance of Deduction u/s 35D - increase in share capital - fee paid to Registrar of Companies - stamp fee - in connection with the extension of the industrial undertaking or setting up of a new industrial undertaking - Held that:- The findings of the AO were not controverted by the CIT (Appeals) or by the learned authorised representative by showing that the assessee was fulfilling the requirements of subsections (1) and (2) of section 35D of the Act and we have also discussed that in the name of rule of consistency, mistake cannot be perpetuated and, therefore, we hold that the learned Commissioner of Income-tax (Appeals) was not justified in deleting the disallowance made by the Assessing Officer under section 35D - We, therefore, reverse the order of the learned Commissioner of Income-tax (Appeals) on this issue and restore that of the Assessing Officer – Decided in favour of Revenue. The disallowance was made by the Assessing Officer by giving a specific finding that the assessee was not fulfilling the conditions imposed under subsections (1) and (2) of section 35D - Regarding the rule of consistency followed by the learned Commissioner of Income-tax (Appeals) in deleting this disallowance - the view taken by the Assessing Officer in the earlier year was a possible view then there may be a case for taking the same view in the present year as per the rule of consistency - But if the view taken in the earlier year was not a possible view then a mistake cannot be perpetuated in the name of consistency. - Decided against the assessee. Disallowance of Depreciation on Leased Assets – Held that:- Following Indusind Bank [2012 (3) TMI 212 - ITAT MUMBAI] - Principal portion of lease rent had to be excluded from the income and depreciation was not allowable to the lessor in case of financial lease - there was no serious argument was made by the assessee regarding the allowability of deduction on account of depreciation of leased assets and hence, this ground of the assessee was rejected in all the three years. Disallowance of Rates and Taxes - Held that:- The assessee was claiming deduction of this expenditure under section 37 - As per the provision of section 37(1), business expenditure not in the nature of capital expenditure or personal expenditure was allowable - But before this, one more condition was to be fulfilled that the business for which the expenditure is incurred has been set up and commenced - the land was purchased for the proposed joint venture power project and none of the power projects has commenced business - the rates and taxes before commencement of production in a project was a capital expenditure - Even if it does not enhance the value of the land in question then also it cannot be allowed as revenue expenditure because the business had not commenced and therefore, it was a preoperational expenditure – Decided in favour of Assessee.
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