Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2022 (10) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2022 (10) TMI 682 - AT - Income TaxDepreciation on plant & machinery - Disallowance on the ground that the assessee has not generated any business income for the impugned assessment years except other income being interest income - HELD THAT:- Merely for the simple reason that those assets were come into the books of accounts of the assessee on amalgamation, it cannot be said that the assessee has put to use those assets in its business. In this case, the assessee could not substantiate its claim of depreciation on plant & machinery in light of reasons given by the AO that there is no business carried out for the impugned assessment years. Therefore, we are of the considered view that the assessee is not entitled for depreciation on plant & machinery. The assessee has relied upon various case laws on the issue of depreciation on plant & machinery and we find that those case laws are not applicable to the assessee's case and thus, case laws relied upon by the assessee are rejected. We are of the considered view that the assessee is not entitled for depreciation on plant & machinery, and thus, we are inclined to uphold the findings of the Ld. CIT(A) and reject the ground taken by the assessee. Disallowance of foreign travel expenses - AO has disallowed foreign travel expenses on the ground that the assessee has failed to prove nexus between the expenditure for foreign travel and business purpose - HELD THAT:- As we find that the assessee could not justify foreign travel expenses with necessary evidence to prove that said expenditure has been incurred for the purpose of business of the assessee. If the assessee has incurred foreign travel expenses for the business of the parent company, then, the parent company should have incurred the cost of travel of the Director, but not the assessee company. Therefore, we are of the considered view that the assessee is not entitled for deduction towards foreign travel expenses and thus, we are inclined to uphold the findings of the Ld. CIT(A) and reject the ground taken by the assessee. Reopening of assessment u/s 147 - income chargeable to tax had been escaped assessment on account of assessment of other income under the head 'income from other sources' and also deduction allowed towards expenditure incurred by the assessee against other income without debiting to capital work-in-progress - HELD THAT:- In this case, on perusal of reasons recorded for re-opening of assessment, we find that the AO does not have any fresh tangible material to come to the conclusion that there is an escapement of income and further, the basis for reasonable belief of escapement of income is financial statements filed by the assessee for relevant assessment year and thus, we are of the considered view that re-opening of assessment in the given facts and circumstances of the case, is bad in law and liable to be quashed and hence, we quashed re-opening of assessment and consequent re-assessment order passed by the AO u/s. 143(3) r.w.s. 147 of the Act. - Decided in favour of assessee. Addition made u/s. 14A r.w.r. 8D - CIT-A directed the AO to disallow expenses under the head 'interest and finance charges' on account of non-commencement of business activities - HELD THAT:- Hon'ble Supreme Court in the case of Chettinad Logistics (P.) Limited [2018 (7) TMI 567 - SC ORDER] held that Sec. 14A of the Act, cannot be invoked where no exempt income earned by the assessee in relevant assessment year. In this case, there is no dispute with regard to the fact that the assessee has not earned any exempt income. Therefore, we are of the considered view that the AO is erred in disallowing expenditure u/s. 14A r.w.r. 8D(ii) of IT Rules 1962. The Ld. CIT(A) after considering relevant facts has rightly deleted the addition made u/s.14A r.w.r. 8D of IT Rules. Hence, we are inclined to uphold the findings of the Ld. CIT(A) and reject the ground taken by the Revenue. As regards enhancement of income by the Ld. CIT(A) towards disallowance of interest and finance charges for non-commencement of business - Assessee claims to have commenced its business activity of real estate in light of JDA with M/s. Unitech Cestos Realtors Pvt. Ltd., for development of 70 acres of land by virtue of JDA on 22.05.2008, but from the admission of the assessee itself income from operations in relation to real estate business has been commenced from AY 2013-14 onwards. Therefore, we are of the considered view that any expenditure incurred including interest and finance charges in connection with said business should be added back to project work-in-progress to be claimed in appropriate year. Therefore, we are of the considered view that there is no error in the reasons given by the Ld. CIT(A) in directing the AO to disallow interest and finance charges for non-commencement of business. Hence, we are inclined to uphold the findings of the Ld. CIT(A) and reject the ground taken by the Revenue. Disallowance of expenses u/s. 14A r.w.r. 8D in absence of exempt income - HELD THAT :- As disallowance contemplated u/s. 14A cannot exceed exempt income. In this case, the assessee has earned exempt income of Rs. 50,22,099/-, whereas the Assessing Officer has disallowed expenditure u/s. 14A of the Act, at Rs. 1,28,31,758/- contrary to settled law. Therefore, we direct the AO to restrict disallowance u/s. 14A of the Act, to the extent of exempt income earned for the year amounting to Rs. 50,22,099/-. Appeal of assessee partly allowed.
|