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2018 (1) TMI 1111 - HC - Income TaxDisallowance of depreciation claimed on the Wind Turbine Generators - Held that:- To install the wind turbine generators, the assessee must have excavated some earth on the land it purchased. Such excavation, to our mind, does not amount to improving the land; rather, it amounts to a preparatory step for erecting the wind turbines. Therefore, the land evacuation, if any, must be taken as part of infrastructure development for establishing the windmills. AO and both the appellate authorities have misread and misapplied the evidence, and that has led to the perversity of findings. We reckon it to be a judicially reviewable error and accordingly set aside the Tribunal’s finding on the depreciation. As a result, the depreciation of ₹ 38,76,000 (50% for second half addition) claimed on the windmills was allowed. Nature of expenditure - disallowing interest on investment expenditure the assessee incurred on its new the line of business - Held that:- Tribunal, while concurring with the primary and appellate authorities, has observed that to claim the benefit of expenditure, it must concern business carried on by the assessee, and the profits to be computed and assessed to tax should be earned after the business is set up. It has concluded on facts that, by the time the assessee claimed the tax benefit, it had not set up the business or made it operational; so the question of interest concession under section 36 (1) (iii) of the Act does not arise. Indisputably, the assessee could not demonstrate to AO’s satisfaction that it actually invested its own funds rather than those it borrowed. Thus, we find it difficult to upset the concurrent findings. Indeed, the assessee did enter a new line of business, unconnected to its existing business, and it had not by then commenced that new business - uphold the Tribunal’s findings on the AO’s disallowing interest on investment expenditure the assessee incurred on its new the line of business.
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