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2016 (8) TMI 684 - AT - Income TaxDenial of deduction u/s. 54G - Held that:- The capital gains have to be utilized for the claim of deduction within a specified period. Since the capital gains has to be utilized, the logical conclusion would be the capital gains arising on the date of sale, therefore, in our understanding of the law, although the transfer took place on 10.04.2006 but the capital gain arose on the date of sale of the capital asset. The capital gains so arose was utilized by the assessee for the purpose of business of industrial undertaking and, therefore, the assessee fulfils the mandatory condition. The assessee purchased the land at village Duttpura which is a non-urban area, put up the factory and purchased new plant and machinery before one year of date of transfer. The assessee has utilized the LTCG for the period from 06.08.2006 to 31.03.2008 The assessee has fulfilled the mandatory conditions making itself eligible for deduction u/s. 54G of the Act. We accordingly set aside the findings of the ld. CIT(A) and direct the A.O. to allow deduction u/s. 54G of the Act to the assessee. The common grievance in both these appeals is allowed in favour of the assessee and against the revenue. Disallowance u/s. 14A - Held that:- We find that at clause (i), the A.O has himself mentioned that the amount of expenditure directly relating to income which does not form part of total income as Nil which means that there is no element of borrowed funds. However, in clause (ii), the A.O. has computed the disallowance of expenditure by way of interest during the previous year. This stand of the A.O. is contradictory. Therefore, in our considered opinion, the element of interest taken for consideration of the disallowance for computing ₹ 2.04.538/- is uncalled for and deserves to be deleted. The balance amount remains is ₹ 37,699/-. Since, admittedly the assessee has suo motu disallowed ₹ 1,81,902/-, no further disallowance is required. We accordingly direct the A.O. to delete the addition of ₹ 60,335/-. - Decided in favour of the assessee
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