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2014 (2) TMI 796 - HC - Income TaxEntitlement for deduction u/s 57(iii) of the Act – Interest incurred on borrowed funds – Held that:- Relying upon CIT Vs. Rajendra Prasad Moody [1978 (10) TMI 133 - SUPREME Court] - Assessee rightly contended that the expenditure on account of interest was a proper expenditure allowable under section 57 - there was no reason why a proper expenditure should have been disallowed only because the investment was not made for the purpose of earning dividend - There is no finding that the investment was made otherwise than for the purpose of making an income - both the Tribunal and the AO were wrong in disallowing the expenditure – Decided in favour of Assessee. Disallowance of depreciation on motor cars - Whether the Tribunal was justified in law in upholding the disallowance of 1/5th depreciation on motor cars hired out by the appellant by invoking Section 38(2) of the Act – Held that:- The vehicle has been hired out - the vehicle is not used for the business of the company. The vehicle has been used for the purpose of earning money by way of hiring charges – thus, the order disallowing any part of the depreciation on account of personal use of the directors, under section 38(2), does not appear to have been passed upon application of mind - When the director had no opportunity to use the car, the question of disallowing any part of depreciation on account of directors’ personal use appears to be altogether misconceived – Decided in favour of Assessee.
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