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2017 (11) TMI 56 - AT - Income TaxAssessment of short term capital gain on consideration received on sale of factory building with furniture and fixture - Held that:- Recent decision of Hon’ble Bombay High Court in the case of Chaturbhuj Dwaarakadas Kapadia vs. CIT (2003 (2) TMI 62 - BOMBAY High Court) has compelled many assessee's to rethink as to the correct interpretation of clause (v) of section 2(47) whether transaction of possession or whether transaction means transaction of possession or whether transaction means act of entering into an agreement laying down the terms and conditions about possession of immovable properties. In view of the above facts and circumstances, we are of the considered view that the AO as well as CIT(A) has gone wrong in interpreting the facts of the case and hence, we are of the view that the transfer of the above stated property took place only in AY 2011-12, when assessee has declared the capital gain accordingly and paid the taxes. Consequently, the assessee is also entitled for depreciation on the factory and its machinery in this year i.e. AY 2010-11. Accordingly, we allow this inter-connected issue of the assessee’s appeal. Disallowing unabsorbed depreciation carried forward/ brought forward - Held that:- This issue is squarely covered by the decision of Hon’ble Gujarat High Court in the case of General Motors India (P.) Limited Vs. DCIT [2012 (8) TMI 714 - GUJARAT HIGH COURT] wherein the issue regarding unabsorbed depreciation available to assessee as on 01-04-2002 will be dealt in accordance with provisions of section 32(2) as amended by the Finance Act 2001 and not by the provisions of Section 32(2) of the Act as it stood before the amendment. Thus we direct the AO to re-compute the unabsorbed depreciation without any limitation in term of the decision. This issue of the assessee’s appeal is remanded back to the file of the AO and allowed for statistical purposes. Disallowance of interest on bank loan u/s 43B - Held that:- It is not justifiable to say that no payment has been made towards outstanding interest. Further, we find that the interest of ₹ 11,53,110/- is pertaining to the A.Y. 2007-08 which was disallowed in that year and hence, the same cannot be disallowed in this year also. Further, the reliance placed on CBDT circular no. 07/2006 by the learned Counsel for the assessee, we find that the circular very categorically lays down that the amount of unpaid interest, which has been converted by the bank as the loan, is allowable as deduction in the year in which the said loan is repaid. In the present case the assessee has repaid the entire amount of interest and loan to the bank in the A.Y. 2010-I1. Thus, the amount of interest of ₹ 8,62,448/- which is included in amount of ₹ 11,53,110/- is allowable as the deduction in this assessment year. Accordingly, we allow this claim of the assessee and direct the AO to compute the income accordingly. Additions under section 41(1) - Held that:- We find that the assessee has not written off the said liability in the current year, nor Agarwal plastics has waived off the same. Thus, no disallowance is warranted merely because the liability is outstanding since several years. This issue of the assessee’s appeal is also allowed.
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