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2016 (6) TMI 1348 - AT - Income TaxDisallowance of repairs and maintenance expenses - as per AO assessee had claimed 30% deduction on account of ‘Income from house property’ and, hence, repairs and maintenance expenses were not allowable - assessee earned rental income - claim of the assessee is that this property was not used for letting out and, hence, no disallowance be made to this extent - HELD THAT:- As the necessary details of expenses incurred in respect of the properties let out are not specifically available, it expedient to set aside the impugned order and restore the matter to the file of AO for restricting the deduction qua the properties used for the business purpose. The AO is directed to first identify the properties let out fully or partly and, then, disallow the repairs and maintenance expenses relatable to such let out properties. Needless to say, the assessee will be allowed a reasonable opportunity of being heard. Addition of Administrative expenses - AO observed that the business income of the assessee from ‘Fun and fair game’ - HELD THAT:- AO has made an ad hoc 25% disallowance of expenses by observing that the revenue from the business was much less than the expenses incurred. Apart from that, he has not disputed the factum of the assessee having actually incurred these expenses for the purpose of its business. Simply because the business receipts are less, cannot be a reason to disallow the expenditure incurred otherwise for the purpose of business. Disallowance of depreciation - Since the assessee was carrying on the business of Game and toy machines, the AO allowed depreciation on Games and toy machine - HELD THAT:- Once there are assets including Plant and machinery, vehicles, computers, etc., which are being used for the purpose of business from earlier years, the AO cannot disallow depreciation on such assets simply by presuming that such assets must not have been used for the purpose of business. AO has admitted that the assessee carried on the business activity of Game and toys. Unable to appreciate as to how this business under the given circumstances can be carried on without the plant and machinery, vehicle, computers, etc., all of which are necessary items for carrying on the business activity. In my considered opinion, the authorities below were not justified in restricting the depreciation on ad hoc basis when the assets were used for the business purpose. - Addition to be deleted.
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