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2019 (3) TMI 694 - AT - Income TaxDisallowance of the expenditure incurred on repair and maintenance - nature of expenditure - revenue or capital expenditure - HELD THAT:- D.R. rightly pointed out that purchases of laptop, LED screen and Ram and electric motor pump are clearly capital expenditure in nature and total of the same comes to ₹ 1,17,997/- (Rs.24,328/- + ₹ 51,435/- + ₹ 42,324/-). Therefore, these would provide enduring benefit to the assessee and as such could not be treated as revenue expenditure. However, the remaining expenses of the appellate order, are in the nature of software charges, office construction expenses, purchase of hard disk, UPS etc., are clearly revenue expenditure in nature, therefore, no addition could be made for the same. In this view of the matter, we set aside the orders of the authorities below and delete the addition on this head except to the extent. AO is directed to restrict the addition. This ground of appeal of assessee is allowed partly. Disallowance u/s 14A - sufficient own capital to make investment - HELD THAT:- It is clear that assessee claimed that no expenditure have been incurred for earning exempt income. A.O. has not recorded any satisfaction as to how the claim of assessee was incorrect. No material have been brought on record to justify the addition. Further, assessee has sufficient own capital to make investment in the firm. Therefore. no disallowance under section 14A is permissible. appeal of the assessee is allowed. Enhancement of income by CIT(A) - Treating agricultural income as taxable income - Power of CIT(A)- HELD THAT:- it is established that the assessing officer did not consider the agricultural income to be taxable income and assessing officer has considered the issue with reference to disallowance of expenses under section 14A of the Income Tax Act. Therefore, Ld. CIT(A) was not justified in enhancing the income by considering it as source of income on account of Agricultural income considered to be taxable income without any basis as to how the agricultural produce was spontaneous growth. It is also well settled Law that power of enhancement was restricted to the subject matter of the assessment or the source of income, which had been considered expressly or by clear implication by the assessing officer from the point of view of taxability and that the Appellate Commissioner had no power to assess the source of income which had not been taken into consideration by the assessing officer. The Ld. CIT(A), however, as against the Law has considered the new source of income for the purpose of making the addition by enhancing the income of the assessee from different new source, which have not been considered by the assessing officer. Thus, the Ld. CIT(A) clearly acted beyond his power and jurisdiction. Addition u/s 14A by disallowing expenses - HELD THAT:- In this case, assessee has not made any investment to earn agricultural income because land was acquired for real estate business purposes. No expenses have been incurred to earn any agricultural income. The assessee has sufficient own funds to make investment in agricultural land. Disallowance under section 14A is also not permissible in the facts and circumstances of the case and our findings on Ground No.3 above, would also support that the addition made by the assessing officer under section 14A of the Income Tax Act, 1961, was also not permissible. We set aside the orders of the authorities below and delete the entire addition made by the assessing officer as well as an enhanced by the Ld. CIT(A).
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