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2014 (9) TMI 1156 - AT - Income TaxDisallowance of interest u/s 36(1)(iii) - disallowance of expenditure us/ 14A related to exempted income - Rate of depreciation on Wind Turbine Generator - Held that:- The capital work-in-progress was with regards to the building at Ayali Kalan and the AO has not mentioned even once that this building was not being constructed by the appellant for his business. That being so, no disallowance on this account can be made u/s 36(l)(iii). The disallowance if at all in these circumstances can be made under proviso to section 36(l)(iii). However, for applying the proviso it has to be shown that the appellant had borrowed funds specifically for capital work-in-progress. The AO has not shown that any funds were borrowed for this purpose - Claim of interest paid allowed. Additions u/s 14A r.w.r 8D - Held that:- Admittedly the order under appeal is assessment year 2009-10 to which the provisions of Rule 8D are clearly applicable. Similar issue of disallowance under section 14A of the Act read with Rule 8D of the Rules arose before the Tribunal in assessee's own case in assessment year 2008-09 (supra) and the applicability of the said provisions has been upheld. AO directed to recompute the disallowance under section 14A read with Rule 8D(ii) of the IT Rules by following our directions in the order relating to assessment year 2008-09 and in respect of netting of interest - However, the disallowance under Rule 8D(iii) is to be computed in line with the provisions of the Act i.e. ˝ % of the average of the value of investment and not at the closing value of the investments. Rate of Depreciation on Wind Turbine Generator - Held that:- the power evacuation infrastructure facility is part and parcel of the windmill though partly owned by the assessee on which the assessee is entitled to the claim of depreciation at the same rate on which depreciation was allowed on the windmill. Further the assessee is also entitled to the claim of depreciation at higher rate on the transmission lines which again are part and parcel of the windmill.
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