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2017 (1) TMI 769 - AT - Income TaxDisallowance of interest expenditure on account of capital work-in-progress - Held that:- We noticed that the assessee itself has admitted that loan funds have been used for giving share application money to its subsidiary. We also noticed that the own funds available with the assessee is in far excess of the capital work-in-progress. Hence, we are of the view that there is no requirement to make any disallowance out of interest expenditure on account of capital work-in-progress. Accordingly, we set aside the order passed by the learned CIT(A) on this issue and direct the Assessing Officer to delete the disallowance - Decided in favour of assessee Disallowance of Repairs and Maintenance - Held that:- The ledger account copy of M/s Repairs & Maintenance account show that the assessee has credited the sum of ₹ 62.00 lakhs to the above said account on 31.3.2006, i.e., the assessee has not shown the amount of ₹ 62.00 lakhs as a separate item of credit in the Profit and Loss account and instead reduced the Repairs and maintenance account with the above said figure. The net effect is that the assessee has already offered the sum of ₹ 62.00 lakhs as its income. Thus, we notice that the AO has assessed the above said amount of ₹ 62.00 lakhs without properly appreciating the facts, whereas the Ld CIT(A) has deleted the same by correctly appreciating the facts.- Decided in favour of assessee Disallowance made u/s 14A - Held that:- CIT(A) had restricted the disallowance to 10% of the dividend income in the succeeding year and the same has been accepted by the assessee. Accordingly, considering the factual matrix available during the year under consideration, we are of the view that the disallowance u/s 14A of the Act may be restricted to the same level of 10% of dividend income and the same, in our considered view, would work out to a reasonable figure for making disallowance. Accordingly we set aside the order passed by Ld CIT(A) on this issue and direct the AO to restrict the disallowance to 10% of the exempt dividend income earned by the assessee during the year under consideration. Addition on the basis of AIR information - According to Ld A.R, the assessee has reconciled the TDS amount vis-à-vis the rental income declared by the assessee and hence the error, if any, has occurred at the end of M/s Kamat Hotels (P) Ltd - Held that:- We notice that the difference noticed by the AO requires to be reconciled. According to the assessee, it has duly declared the receipts and the same has been reconciled with TDS amount also. Accordingly it was contended that the mistake, if any, should have occurred at the end of M/s Kamat Hotels P Ltd. Since it is a matter requiring reconciliation, we are of the view that this issue needs to be examined afresh at the end of the AO. Disallowance of depreciation at higher rate - Held that:- In the computation of total income made in the assessment order, we notice that the AO has also disallowed the above said amount of book depreciation and allowed depreciation for income tax purposes at ₹ 2,41,65,640/-. If the above said figure of ₹ 2.41 crores does not include the depreciation amount of ₹ 97,118/-, then there is no requirement of disallowing the same again. Accordingly we set aside this to the file of the AO for the limited purpose of verifying as to whether the depreciation of ₹ 2.41 crores allowed by the AO includes the amount of ₹ 97,118/- or not. If it is not included, then the AO should delete the addition of ₹ 97,118/-, otherwise the addition shall be sustained. The order of Ld CIT(A) passed on this issue stands set aside accordingly. Disallowance of bidding expenses - Held that:- These expenses have been incurred by the assessee in the course of carrying on its business and hence the same has to be allowed as deduction, since it has been incurred in furtherance of the business activities of the assessee as the expenditure incurred on bidding, even if it is unsuccessful, should be allowed as deduction
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