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2014 (5) TMI 1135 - ITAT AHMEDABADDisallowance u/s 14A computation - Held that:- We are also of the view that the basic facts about the details of the investment as well as the source of the investment in shares and mutual funds for the purpose of earning exempted dividend has not been properly explained to the lower authorities. As decided in assessee’s own case for A.Y. 1998-99 and 2001-02 wherein, as well, the matter was restored for reconsideration as per law as relied upon Hero Cycle [2009 (11) TMI 33 - PUNJAB AND HARYANA HIGH COURT ] wherein it was observed that disallowance u/s.14A requires finding of incurring of expenditure and where it is found that for earning exempted income no expenditure has been incurred, disallowance u/s.14A could not be made. Consistent with the view taken in the past by the Tribunal in assessee’s own cases, we deem it proper to restore this ground back to the stage of the AO to be decided denovo after taking into account the latest decisions on the issue of the applicability provisions of Section 14A. The AO is required to examine the balance-sheet and related accounts of the assessee so as to see whether there was investment in shares/mutual funds out of the borrowed funds or non borrowed funds. In the light of the above directions, this ground of the assessee may be treated as allowed for statistical purpose only. Depreciation on the assets leased back to Rajasthan Electricity Board (RSBB) is to be allowed as per law. Expenditure in respect of a sale of a capital asset - allowable Revenue expenditure u/s.37 - Held that:- The accepted factual position was that the LPG Division was sold by the assessee in earlier years as a “slump sale”. We have been informed that on sale of the said LPG Division the assessee had offered to tax a ‘capital gain’ in the past. The assessee’s only argument is that the additional stamp duty was demanded in the year under consideration, therefore, the liability had crystallized during the year; hence, allowable only in this year. We are not convinced with the argument of learned AR because under the provisions of Section 37 of IT Act an expenditure which is incurred wholly and exclusively for the purpose of the business can be allowed as an expenditure. The expenditure of additional stamp duty being not an expenditure for the purpose of the business of the assessee but pertained to a capital gain which was shown in the past years, therefore, not to be allowed u/s.37 of IT Act for the year under consideration. Expenditure for acquiring license to use software applications would be applicable as Revenue expenditure. Adjustment of capital gain - whether a short term capital gain/loss can be adjusted against the long term capital gain/loss - Held that:- We are of the view that the long term capital gain is to be adjusted against the long term capital loss and likewise the short term capital gain is to be adjusted first against the short term capital loss. The provisions of the Act has prescribed the intra-head adjustments, therefore, the Revenue Authorities have correctly held that the appellant had wrongly adopted the method of adjustment of capital gain. Further we have also noted that, although not in the ground of appeal, the question of cost as per index cost was directed to be computed by AO as per Section 48 vide paragraph 16.2.1 of the order of learned CIT(A). Therefore, the assessee should not have any grievance in this regard. This ground of the Assessee is hereby dismissed.
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