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2022 (8) TMI 1209 - AT - Income TaxDepreciation on FSI - CIT(A) had allowed depreciation @ 10% on the actual payment - HELD THAT:- CIT(A) noticed that the identical issue has been decided by the ITAT in assessee’s own case [2016 (10) TMI 490 - ITAT MUMBAI] relating to A.Y. 2005- wherein the Tribunal has held that the depreciation is allowable @ 10% and depreciation has to be allowed on the whole consideration towards FSI. Disallowance of depreciation on intangible assets - HELD THAT:- As decided in own case relating to A.Y. 2004-05 allocation of cost of acquisition for each block of assets in a fair and reasonable manner as permitted by law had to be accepted. Further, the CIT(A) observed that even the Assessing Officer has not denied that the hotel business could not be carried out without the sale licenses and permits. CIT(A) further stated that 5 proviso to Section 32 of the Act would not be attracted to the case of the assessee. We, therefore, do not find any reason to interfere in the order of CIT(A). Disallowance of interest expenses paid to M/s Cox & Kings - assessee justified payment of interest @ 24% stating that the debentures could not be redeemed on the date of maturity and it was constrained to roll over the maturity for further period after accepting the terms and condition that the interest shall be paid at rate of 24% - AO was not convinced with the explanations of the assessee and accordingly, he restricted the interest rate on Debentures @ 12% - HELD THAT:- We notice that the Tribunal has deleted an identical disallowance made in AY 2010-11 following the decision rendered by Jaipur bench of Tribunal passed [2016 (7) TMI 1657 - ITAT JAIPUR] wherein it was observed that the revenue has not placed any material under identical facts and circumstances that the fair market rate of interest is lower than what the assessee has claimed. It was further held that the AO has to give a finding having regard to fair market rate. Accordingly, it was held that the AO could not have made disallowance u/s 40A(2)(a) of the Act. We notice that the Hon’ble Bombay High Court, vide its order [2021 (12) TMI 22 - BOMBAY HIGH COURT], has upheld the view expressed by the co-ordinate bench in AY 2010-11. In the years under consideration also, the AO has not given any finding having regard to the fair market rate. The Ld A.R further submitted that the assessee has been continuously incurring losses and the said losses could not be set off by the assessee for want of profits. Accordingly, he submitted that there was no tax benefit to the assessee by paying interest at the alleged higher rate. - Decided against revenue. Disallowance of interest u/s 36(1)(iii) - AO noticed that the assessee has given interest free advances to its sister concerns, while it was paying interest on moneys borrowed by it - AO disallowed proportionate interest expenditure in all the five years under consideration - CIT-A deleted the addition - HELD THAT:- We notice that the quantum of interest free funds taken by the assessee from its related parties are more than the amount of interest free advances given to other related parties. Under identical set of facts, the co-ordinate bench has deleted the disallowance of interest expenses in AY 2010-11 following the decision rendered in the case of Reliance Utilities and Power Ltd [2009 (1) TMI 4 - BOMBAY HIGH COURT] - Accordingly, following the above said decision, we confirm the orders passed by Ld CIT(A) in deleting the disallowance in all the years. Disallowance of travelling expenses - as no details like proof of payment, nature and allowability of travelling expenses were furnished, the AO disallowed entire claim - HELD THAT:- We notice that the AO has made disallowance only in AY 2012-13 and in all other years, the claim has been allowed. Since the assessee has failed to furnish the details, some disallowance is called for. We find that the disallowance of 50% made by CIT(A) is reasonable. Accordingly, we uphold the order passed by Ld CIT(A) on this issue. Disallowance of claim made u/s 40(a) - deduction/payment of tax deducted at source - HELD THAT:- In the earlier paragraphs, we had upheld the decision rendered by the Ld CIT(A) on the issue of disallowances made u/s 40(A)(2)(a) and 36(1)(iii) in AY 2013-14 and 2014-15. Hence the claim made by the assessee u/s 40(a) in AY 2014-15 and 2015-16 was rightly allowed by Ld CIT(A). Accordingly, we uphold the order passed by Ld CIT(A) on this issue in AY 2014-15 and 2015- 16.
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