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2015 (10) TMI 2105 - AT - Income TaxShort term capital loss - sale of plant & machinery as scrap - whether the assessee could not prove its motive i.e. for what purpose the plant and machinery was purchased and in which circumstances the same was sold immediately, after bearing such huge loss? - CIT(A) treating the loss as loss incidental to trade - Held that:- Undisputedly the assessee is not engaged in any such business activities in which these machineries can be used. The assessee in fact was engaged in construction of building, flats, etc. Therefore, the factory building was purchased by the assessee only for construction of the building and flats. At the most, the cost of machineries can be added in the cost of land purchased for raising flats and building. The machineries never became the part of business asset of the assessee, as the assessee was never engaged in any manufacturing activity. Therefore, the alleged short term capital loss as claimed by the assessee on sale of machineries cannot be allowed, as the machineries were never purchased for its use in the business of the assessee. The total cost of land may be increased by the alleged loss suffered in sale of machineries. In the light of these facts, we do not subscribe the view of the ld. CIT(A) on this issue and accordingly we set aside his order in this regard and restore that of the Assessing Officer. - Decided against assessee. Disallowance of interest and finance charge - CIT(A) deleted disallowance - Held that:- In the absence of any finding of the Assessing Officer that the borrowed funds were diverted for advancing interest free loans, no disallowance of interest payment can be made. We accordingly find no merit in the Revenue’s contentions. We, therefore, confirm the order of the ld. CIT(A) in this regard.- Decided against revenue. Disallowance of repair expenses - Held that:- Assessing Officer has made ad hoc disallowance of 20% of the repair expenses on the ground that repair expenditures are not open for verification, as vouchers were not produced. The disallowance was restricted to 10% by the ld. CIT(A). We find no justification to disturb the findings of the ld. CIT(A) in this regard. Accordingly, we confirm the order of the ld. CIT(A) on this issue .- Decided against revenue.
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