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2014 (2) TMI 935 - AT - Income TaxDisallowance out of interest expenditure - Held that:- Some business exigency was involved for the interest expenditure claimed - As observed by the A.O. certain manipulation by the assessee to reduce its taxable income cannot be ruled out - The disallowance at the rate of 25% made by the A.O. was excessive - To justify, the disallowance made out of interest expenditure has been restricted to the extent of 10% of the total interest expenditure claimed by the assessee - Partly allowed in favour of assessee. Electricity expenses of the offices - Held that:- The burden is on the assessee to establish that the expenses claimed were wholly and exclusively for the purpose of business - The facts of the case require verification - The issue has been restored for fresh adjudication. Disallownace u/s 43B - Held that:- The service tax in question was payable by the assessee for the financial year 2007-08 and as per the relevant Service Tax Rules, the same was payable after recovery from the receiver of the service - He submitted that such recovery was made by the assessee during the year under consideration and the service tax payable for financial year 2007-08 was duly paid on such recovery within the stipulated period - No such verification has been made either by the A.O. or by the ld. CIT(A), the matter should be restored to the file of the A.O. for such verification – The issue has been restored for fresh adjudication. Expenditure incurred for protecting the ownership of hoardings – Held that:- The displaying of hoardings being the business of the assessee, the expenditure incurred for right to display is thus business right of the assessee – If the expenditure incurred for protection of business rights, is revenue in nature – If the expenditure is incurred for acquisition of right to display will fall in the definition of capital expenditure – Relying upon the decision in the case of Dalmia Jain & Co. [1971 (7) TMI 2 - SUPREME Court] - In deciding whether a particular expenditure is capital or revenue in nature, what the courts have to see is whether the expenditure in question was incurred to create any new asset or was incurred for maintaining the business of the company - If it is the former it is the capital expenditure; if it is the latter, it is the revenue expenditure - Distinction is to be made as to whether the expenditure is for creating, curing or completing the assessee’s title to capital or for protecting the business – The issue has been restored to the file of A.O. to make a distinction as to which of the expenditure was incurred by the assessee for protection of its right to display over a prominent or particular site and which of the expenses were incurred for acquisition of right to display on such sites.
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