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2019 (8) TMI 447 - AT - Income TaxDisallowance of depreciation - revenue doubts existence of plant and machinery - no agreement place that plant and machinery given on lease by assessee in course of its business - whether claim of depreciation against the assets was owned by assessee and/or it was put to use for purposes of business? - HELD THAT:- In facts of present case, authorities below rejected claim of depreciation for the reason that, there is no asset, as has been claimed by assessee, and that, no such assets has been used for purposes of business which generated any income, on which claim of depreciation could be computed. Mere existence of plant and machinery on which depreciation is claimed has been doubted, and assessee has not been able to substantiate the same by way of any agreements entered into by it, with parties to which plant and machinery has been released on hire purchase. Even in the preceding years assessee has not been able to establish existence of plant and machinery by way of corroborative evidences. Before us, Ld.AR was called to file documents in respect of existence of plant and machinery on which depreciation is claimed. No evidence to establish prima facie existence of machinery has been brought on record. Under such circumstances ratio of decisions relied upon by Ld. ar is not applicable to the facts of present case. - Decided against assessee. Addition u/s 14A in computing book profit u/s 115 JB (2) Explanation 1 clause (f) - HELD THAT:- Admittedly, there is no exempt income earned during the year by assessee. This issue therefore stands covered by the ratio laid down by Delhi Special Bench in case of ACIT vs Vireet Investments Pvt. Ltd. [2017 (6) TMI 1124 - ITAT DELHI] . We therefore direct AO to delete disallowance computed under section 14 A while computing book profits. Suo-moto disallowance computed by assessee u/s 14A in regular provisions - HELD THAT:- It is a legal claim of assessee that by assessee inadvertently even though no exempt income was earned during the year under consideration may be deleted by following the ratio laid down by Hon’able Delhi High Court in case of CIT vs Chem Investment [2015 (9) TMI 238 - DELHI HIGH COURT] . As the issue is set aside to Ld.AO in respect of book profit computation, we direct Ld.AO to consider assessee’s claim of disallowance under section 14A, as there is no exempt income earned by assessee. This ground raised by assessee stands allowed. Disallowance of interest u/s 36 (1) (iii) - HELD THAT:- As AR tried to make a point on disallowance by submitting that loan advanced by assessee to Vectra Advanced Engineering Pvt.Ltd was due to prior commitments, being a group concern. Further there is no dispute regarding loan having not been advanced by assessee. Revenue is aggrieved with the fact that, assessee borrowed loan at 14% and advanced to Vectra Advanced Engineering Pvt.Ltd at 9% and thereby holding loan transaction, not at market price. One has to look into the transaction in an holistic way taking into consideration Commercial expediency. It is an agreed position that assessing officer cannot dictate a businessman how to conduct its business. However it also cannot be denied that the interest at which assessee has extended borrowed funds to its group concern is much low than SBI rate. Restricting the disallowance to 2% being difference between the rate at which assessee borrowed funds and 12% being SBI rate during relevant period. Accordingly this ground raised by assessee stands partly allowed
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