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2017 (5) TMI 1752 - AT - Income TaxDepreciation @ 10% on road laid by the assessee holding that the roads are of the nature of plant and machinery - HELD THAT:- Similar issue was decided by the Tribunal in assessee’s own case [2008 (10) TMI 712 - ITAT CHENNAI] CIT(A) has directed the Assessing Officer to allow depreciation @ 10% on the road by treating it as building. The only objection of the ld. DR is that the Department has not accepted the decision of the Tribunal and the Revenue has preferred further appeal before the Hon’ble Madras High Court, but could not be able to place on record any material to show that the order of the Tribunal, on the basis of which the ld. CIT(A) has passed the order, has been reversed or set aside by the Hon’ble Jurisdictional High Court. Therefore, in view of the facts, circumstances and material on record, we do not find any valid reason to interfere in the orders passed by the ld. CIT(A) on this issue for all the four assessment years in this case and while confirming the impugned order, we dismiss the grounds of appeals of the Revenue being devoid of any merits. Depreciation on lease hold right as eligible for depreciation as intangible asset - HELD THAT:- Transfer by way of lease is treated as transfer of a capital asset on the principle that the lease creates an interest in the land and therefore to that extent, it extinguishes the right of the transferor. If the facts of the present case are analysed in the context of the law laid down by the Hon’ble Supreme Court and various sections of the Income Tax Act, we have no difficulty at all in holding that when the assessee transfers his leasehold rights in the land in his occupation by way of a lease to another person, it amounts to extinguishing his rights in the property and since his leasehold rights had created an interest in the land, i.e. , enjoyment and possession and therefore it would definitely come within the definition of "capital asset" as defined under section 2(14) of the income tax act. Since the assessee does not own the assets in its own case, the Assessing Officer disallowed the depreciation as claimed by the assessee. Once the right is extinguished by means of lease deed and shall be treated as transfer of a capital asset on the principle that the lease creates an interest in the land and therefore, the transfer of lease would amount to transfer of a capital asset, we are of the considered opinion that the assessee is eligible to claim depreciation on the asset get transferred by means of lease deed. In view of the above, the ground raised by the Revenue is dismissed. Disallowance u/s 14A - HELD THAT:- Exemption extended to dividend income would relate only to the previous year when the income was earned and none other and consequently the expenditure incurred in connection therewith should also be dealt with in the same previous year. Thus, by application of the matching concept, in a year where there is no exempt income, there cannot be a disallowance of expenditure in relation to such assumed income. The language of s. 14A(1) should be read in that context and such that it advances the scheme of the Act rather than distort it. See MADRAS INDUSTRIAL INVESTMENT CORPORATION LIMITED VERSUS COMMISSIONER OF INCOME-TAX [1997 (4) TMI 5 - SUPREME COURT We are of the view that the provisions of s. 14A read with Rule 8D of the Rules cannot be made applicable in a vacuum i.e., in the absence of exempt income. The questions of law are answered in favour of the assessee and against the department and the appeal allowed
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