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2014 (3) TMI 255 - AT - Income TaxDeletion made u/s 14A of the Act – Held that:- Rule 8D(1) specifically states that determination of disallowance under Sub-Rule (2) can be done only when Assessing Officer is not satisfied with the correctness of the claim of expenditure made by the assessee - Such a satisfaction has to be an objective one based on cogent reason – Relying upon REI AGRO LTD, KOLKATA Versus DCIT CENTRAL CIRCLE-XXVII, KOL [2013 (9) TMI 156 - ITAT KOLKATA] - CIT(Appeals) was justified in holding that Assessing Officer could not have applied Rule 8D(2)(iii) of the Act and made a disallowance of ½ percent of average value of investment -CIT(Appeals) was justified in deleting such disallowance – there is no reason to interfere with the order of CIT(Appeals) – Decided against Revenue. Deletion of disallowance of interest expenditure – Held that:- There is nothing on record to show that during the relevant previous year assessee was doing any business as a builder - to fasten a completed contract method of accounting on an assessee who is not doing any construction or undertaking any project work, will not be appropriate - It cannot be said that the loan raised by assessee from ICICI Bank, which was utilized for paying advances for acquiring built up spaces, was in relation to extension of an existing business. Business of assessee was real estate and the assesese's intention was to trade in constructed spaces - It never contemplated to use such constructed spaces for its own use – the decision Commissioner of Income-Tax Versus Lokhandwala Construction Inds. Ltd. [2003 (1) TMI 93 - BOMBAY High Court] followed - As long as the payment of advance was not for acquisition of fixed assets but only for acquiring stock-in-trade, assessee was entitled for deduction under section 36(1)(iii) of the Act – thus, the CIT(Appeals) was justified in deleting the addition made by the Assessing Officer – Decided against Revenue. Deletion of disallowance of processing charges on loan – Held that:- Since loan raised from State Bank of India was used by the assessee for financing its stock - processing charges incurred for raising such loan was an allowable expenditure – there is no reason to interfere with the order of CIT(Appeals) – Decided against Revenue. Disallowance of depreciation on a boiler – Held that:- The boiler on which depreciation was not allowed, was one which was leased out by the assessee in earlier years, income from which was admitted - Thus the boiler was already part of the block of assets of the assessee - Once a machinery is becomes the part of a block, it looses its separate identity - Depreciation is granted on block of assets as stipulated in section 36(1)(ii) - Once the boiler was already used, it cannot be said that it was not ready for use - Passive use of the boiler, argument by the assessee has to be accepted – thus, the disallowance was not in accordance with law – Decided in favour of Assessee. Valuation made u/s 50C of the Act – Valuation of LTCG on transfer of assets – Held that:- Revenue has not rebutted the submission of the assessee that it had objected to the adoption of value assessed by the Stamp Valuation Authority before the Assessing Officer - There is no case for the Revenue that the value assessed by the Stamp Valuation Authority was subject to any dispute in any appeal, revision or reference – the Assessing Officer was obliged to refer the valuation to a Valuation Officer in accordance with sub-section (2) of section 50C of the Act - the matter requires a fresh look by the Assessing Officer - Assessing Officer shall refer the valuation to the Departmental Valuation Officer – order set aside and the matter remitted back to the AO for fresh consideration – Decided in favour of Assessee.
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