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2017 (2) TMI 637 - AT - Income TaxDisallowance made u/s. 35D - assessee is engaged in the business of Third party logistics operations - Held that:- CIT(A) has given finding that the assessee has not issued any shares for public subscription and the same appears to be a case of private placement of equity. The learned CIT(A) has also stated that the assessee has not met any of the required criteria specified in section 35D of the Act. Accordingly, the learned CIT(A) held that the disallowance made by the Assessing Officer was justified. Even though, learned AR argued that the claim made by the assessee is allowable u/s. 35D of the Act, yet he could not convincingly explain as to how this expenditure would fall in the list of expenses specified u/s. 35D of the Act. Further in the case of Brooke Bond India Ltd. (1997 (2) TMI 11 - SUPREME Court) has held that expenditure incurred in augmenting the share capital is capital in nature. Hence, we do not find any reason to interfere with the order passed by the learned CIT(A) on this issue. - Decided against assessee. Double addition of interest income - Held that:- The assessing officer has already assessed the interest income (credit entry), whose corresponding debit entry is the increase in the amount of “Capital work in progress”. In any case, since Capital workin- progress is a Balance sheet item, its increase will not increase the business profit of the assessee, as presumed by the Assessing Officer. Hence, we are unable to agree with the view taken by the tax authorities as the same is against the accounting principles. Accordingly, we set aside the order passed by the learned CIT(A) on this issue and direct the Assessing Officer to delete the addition made towards under valuation of work-inprogress, as the same results in double addition of same item. - Decided in favour of assessee.
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