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2013 (9) TMI 561 - AT - Income TaxAddition u/s 41(1) - Addition of Capital Reserve - amount credited to capital reserve on account of waiver allowed by Centurion Bank of principal amount. - Held that:- The orders of the revenue authorities were not clear as to how the amount of principal waived by the bank was arrived at a sum - On the waiver of the principal amount due to the bank and the benefit that accrues to assessee on waiver of such waiver provisions under section 41(1) cannot be applied - One had to look at the statement of the Bank to identify what was the principal amount waived and the interest amount waived and the terms of the loan in respect of which the liability in question arose - It had also to be verified as to what was the interest expenditure that was claimed by the Assessee as deduction in the past while computing its taxable income and what was the amount that was actually allowed as deduction in the past assessments - Neither the order of the AO nor the that of the CIT(A) was clear on this aspect. In principle the provisions of section 41(1) of the Act will not be applicable to waiver of principal amount - We direct the AO to examine the issue with regard to the actual quantum of principal waived and the quantum of interest that was waived by the bank and restrict the addition to be made under section 41(1) of the Act to the extent that the waiver relates to the interest liability of the assessee which had been claimed as deduction by the assessee while computing its income in the past. Depreciation on Electrical Fittings – 15% or 25% - Held that:- The electrical installation once they form part of the block of assets, plant and machinery prior to A.Y 2003-04, depreciation has to be allowed on the written down value of the block - We are of the view that once a particular depreciable asset enters the block it losses its identity and it is not possible to apply the new rates of depreciation on the written down value of the electrical installation by carving out its WDV from the block of assets, plant and machinery - We, therefore, agree with the submissions of the assessee and direct the AO to allow depreciation as claimed by the assessee. - Decided in favor of assessee. Expenses related to discontinued business or not - Held that:- Following Triumph Securities Ltd. Versus Deputy Commissioner of Income-tax, Central Circle 40, Mumbai [2010 (4) TMI 874 - ITAT MUMBAI] and KNP Securities P. Ltd. Versus Assistant Commissioner of Income-tax [2009 (5) TMI 840 - ITAT MUMBAI] - The reasoning of the Tribunal is that the Assessee could not do business because of the ban imposed on its trading by SEBI which he was challenging and the business could not be carried on for reasons beyond the Assessee’s control - We therefore following the order of the co-ordinate bench hold that the Assessee is entitled to carry forward the loss for set off in subsequent assessment years as allowed by the AO. - Decided in favor of assessee.
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