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2015 (9) TMI 554 - AT - Income TaxDisallowance of depreciation on land on which assessee had leasehold rights - alternate claim of assessee that the payment had to be allowed as revenueHeld that:- As decided in assessee's own case for AY 2006-07 to 2008-09 the lease rent paid for acquiring leasehold rights over the land can never be treated as cost of the plant (windmill). The functional test cannot be extended to a case of lease rent for acquiring leasehold rights over the land, whatever be the technical requirement of erecting a plant. The law is well settled that no depreciation is to be allowed on land. By placing reliance on the functional test, it is not possible to allow depreciation on land indirectly. If such a claim were to be allowed, then it could be extended to a case of a land over which a shopping mall is constructed. A shopping mall requires a good area/location, main road for good business. Can it be said that the rent paid for the land over which the shopping mall is constructed is part of the building on which depreciation is to be allowed? In our view, by applying the functional test, it is possible to contend in all the cases that the land is a tool of trade and has to be regarded as plant or building. We therefore decline to accept the proposition canvassed on behalf of the assessee. Hon’ble High Court of Karnataka in the case of HMT Ltd. (1992 (11) TMI 37 - KARNATAKA High Court), has considered the premium for acquiring leasehold rights as nothing but rent paid in advance. The rent paid in advance was for acquiring leasehold rights over the land. Such payment had been considered by the Hon’ble Court as revenue expenditure. In view of the aforesaid decision of the Hon’ble High Court which is in pari materia with the facts of the present case, we are of the view that the lump sum rent paid for the entire period of 30 years has to be considered as revenue expenditure. The CIT(A) wrongly distinguished this decision as a case of lease of factory building. We therefore accept the alternative prayer of the assessee. - Decided partly in favour of assessee. Disallowance u/s.14 of the Act read with Rule 8D - Held that:- It is crystal clear that assessee had a number of transactions in mutual fund units and equity shares during the relevant previous year. It would be naive to presume that assessee would not have incurred any expenditure, but for the brokerage. Claim of the assessee that no indirect expenditure was incurred and there was no necessity of any management inputs in taking decisions regarding the investment portfolio that were to be maintained during the year, cannot be believed.The rule of preponderance of probability can be applied in such circumstances, and the onus to show that no expenditure was indeed incurred falls back on the assessee. The circumstances here are such that the note given by the assessee before the AO was prima-facie incorrect and unbelievable. At the same time it is true that the AO had not called upon the assessee to prove its claim that no expenditure was indeed incurred by it for earning the exempt income. We set aside the orders of authorities below and remit the issue regarding disallowance under Section 14A back to the file of AO for denovo consideration after obtaining the explanation of the assessee. - Decided in favour of assessee for statistical purposes. Interest u/s.234B - assessee contested as paid advance-tax of more than 90% of the assessed tax - Held that:- It is clear that if the assessee had paid more than 90% of the assessed tax, then levy of interest u/s.234B cannot be done. Assessed tax has also been defined in the said section - In our opinion none of the lower authorities had applied their mind to the relevant section before charging interest u/s.234B of the Act. CIT (A) had considered it simply as a consequential ground. We set aside the issue of levy of interest u/s.234B of the Act, back to the file of the AO for consideration afresh in accordance with law. - Decided in favour of assessee for statistical purposes.
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