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2014 (12) TMI 223 - AT - Income TaxValidity of reopening of assessment u/s 147/148 Held that:- The assessee had furnished the return of income declaring total income of ₹ 3.46 Cr on 13.12.2006 - the re-opening of assessment u/s 147/148 of the Act is valid because of the fact that diversion of funds was not properly disclosed by the assessee and therefore proviso to section 147 is not applicable thus, the proceedings initiated u/s 147/148 of the Act have been validity initiated and completed. Capital work in progress disallowed u/s 36(1)(iii) Held that:- Following the decision in Amartex Industries Limited Versus The Addl. CIT, Range 1, Chandigarh & Others [2012 (11) TMI 626 - ITAT CHANDIGARH] - section 36(1)(iii) clearly provides that where harrowed funds have been utilized for investment in the fixed assets for the period from the date of utilization of the funds till the date of putting the assets to use interest relatable to such deployment of funds is to be disallowed thus, the matter is to be remitted back to the AO to re-work the disallowance u/s 36(1)(iii) of the Act by applying pro-rata day product method and not by applying flat rate of interest on the closing balance of each day Decided partly in favour of assessee. Depreciation on fixed assets installed at Baddi unit disallowed Held that:- During the year, no manufacturing activity was carried out at the unit and part of the assets were transferred to the Dera Bassi unit by the assessee - However, balance assets were lying in Baddi unit and the assessee claimed depreciation on the same which was disallowed by the AO and CIT(A) - assessee had temporarily suspended the activities at Baddi unit and had re-started manufacturing activity in AY 2011-12 relying upon COMMISSIONER OF INCOME TAX Versus YAMAHA MOTOR INDIA PVT. LTD. [2009 (8) TMI 27 - DELHI HIGH COURT] wherein it was held that as long as the machinery was available for use, though not actually used, it fill within the expression "used for the purpose of the business" and the assesses could claim the benefit of depreciation thus, the AO is directed to allow depreciation on the fixed assets remaining at Baddi unit Decided in favour of assessee. Interest on monthly balances of capital WIP - Held that:- The chargeability of interest on the amounts debited to work-in-progress is upheld - the contention of the assessee that the amounts debited to work-in-progress had been transferred to the fixed assets and the balance amount left under the head was only on account of interest thus, the matter is remitted back to the AO for verification of claim of assessee Decided in favour of assessee.
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