Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2023 (3) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2023 (3) TMI 1301 - AT - Income TaxDisallowance u/s 14A - both the direct as well as indirect expenditure attributable to earning exempt income needs to be disallowed u/s 14A - HELD THAT:- On perusal of the records placed before us, the AO has stated that the assessee had incurred certain amount of interest expenditure for earning exempt income, while the case of the assessee is that no interest expenditure has been incurred at all for earning such interest income. Accordingly, this ground is being set aside to the file of the AO to verify whether in fact, firstly, whether the assessee has claimed any expenditure for earning interest income and secondly whether all investments for earning exempt income were made from his personal account using own personal funds and not the funds from the proprietary concern. If both the above conditions are satisfied i.e. the investments made in earning exempt income for made out of own personal funds by the assessee in his personal capacity and secondly, no interest expenditure has been incurred and claimed for earning such exempt income, we are of the view that no disallowance is called for under section 14A of the Act. Nature of expenses - Disallowances of expenses claimed in Stavya Spine Hospital (SG Road) - HELD THAT:- The opening of new hospital at the SG Road in the same line of speciality i.e. spine treatment, would constitute extension/expansion of the existing business and since the said expansion is in the same line of business and the same/common management as the existing hospital at Ashram Road, the expenses should be allowed as revenue expenses. It is not the case of Revenue that the expenses are capital nature or that the same have not been incurred exclusively for the purpose of business of the assessee. Accordingly, other expenses i.e. expenses other than depreciation are concerned, the same should be allowed as revenue expenditure. Depreciation for the year under consideration - claim of the assessee is that the depreciation should be allowed since the assets purchased during the year under consideration are “ready to use” - HELD THAT:- We are in agreement with the arguments of the counsel of the assessee to the effect that once the new hospital is an extension of the existing business, the machinery viz. Air-conditioning unit and electrical fittings have been purchased during the year under consideration, the assessee has shown consultancy receipts from the new hospital unit at SG Road, the new hospital is in the same line of business i.e. Spine Speciality as the existing hospital at Ashram Road, then depreciation on the assets should be allowed to the assessee during the year under consideration. Notably, in the assessment order passed for the year under consideration, the AO held that business of the assessee commenced from assessment year 2015-16, however, in the immediately succeeding assessment year i.e. AY 2014-15, the AO allowed the assessee’s claim of depreciation in respect of those assets. Accordingly, keeping in view the totality of facts placed before us for consideration, we are of the view that the assessee is entitled to depreciation on the above assets.
|