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2014 (2) TMI 1113 - AT - Income TaxClaim of depreciation - Road constructed by the assessee – Held that:- The decision in Commissioner of Income Tax Versus M/s Noida Toll Bridge Co Ltd [ 2012 (10) TMI 841 - ALLAHABAD HIGH COURT] followed - The assessee is entitled to the depreciation claimed on Building - BOT Bridge - the depreciation represents the diminution in value of a capital asset when applied to the parties of making profit or gain - The land is held on lease and the road as capital asset has been built on it with exclusive ownership of the road, and the bridge in the assessee-company for the concession period, and which also includes the right to collect tolls and to regulate use of the bridge - Section 32 would apply for the purpose of providing depreciation to be worked out in accordance with the law – thus, the order of the CIT(A) upheld – Decided against Revenue. Disallowance of interest on mobilization advances – Held that:- CIT(A) was of the view that in mercantile system of accounting which is a system of accounting specified u/s. 145 of the I.T. Act, the liabilities and income that accrue have to be taken into account for arriving at the profits - The accrued incomes even if not received has to be taken into account - Liabilities that have fallen due has at the end of the accounting year have to be provided for - The CIT(A) pointed out that the provisions such as 43B or 40(2) and such like statutory disallowances are applicable - Disallowance made by the AO cannot be sustained and CIT(A) was correct in allowing the amount. Quantification of interest – Held that:- The method of quantification of interest payable on mobilization advances was not examined by the CIT(A) – thus, the matter for the limited purpose of quantification is remitted back to the AO – Decided partly in favor Assessee. Disallowance under section 14A of the Act – Held that:- The order of the CIT(A) is reasonable and according to the facts on record - the AO did not examine the issue under section 14A at all - May be he wanted to invoke the provisions of section 36(1)(iii) i.e., diversion of funds borrowed for the purpose of business for non-business activities - The CIT(A) confirmation of disallowance of interest on diversion of ₹ 13.32 crores was also on similar lines, even though stated to have been done under section 14A - disallowance of the interest pertaining to ₹ 13.32 crores stated to have been invested out of borrowed funds, as accepted in earlier years, should have been considered under section 36(1)(iii), which is the relevant section applicable to the above amount - even though the disallowance was wrongly considered under section 14A – the assessee has accepted diversion of borrowed funds to the extent of the above amount in earlier years – thus, the interest on that amount has to be disallowed, if not under section 14A but under section 36(1)(iii) – Decided against both assessee and revenue. Allowance of TDS credit – Held that:- There was no merit in the revenue ground - Obviously on the system of accounting being followed by the assessee, in earlier years TDS credit was given on the mobilization advances - The department cannot deny the credit when the assessee is following the system consistently from earlier years - What is required to be done is only reconciliation of the mobilization advances and TDS claims, so that there is no double claim in any of the years – Decided against Revenue.
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