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2020 (6) TMI 103 - AT - Income TaxAddition u/s 14A - Whether no exempt income is earned by the assessee ? - HELD THAT:- It has been categorically held by the Assessing Officer that no exempt income is earned by the assessee during the year. Thus issue is squarely concluded in favour of the assessee by the decision of the Hon‟ble Delhi High Court in Cheminvest Limited Vs. CIT [2015 (9) TMI 238 - DELHI HIGH COURT] wherein it has been held that Section 14A envisages that there has to be an actual receipt of exempt income during the relevant previous year for purpose of making any disallowance u/s 14A of the Act. Thus,we hold that the learned CIT (Appeals) has correctly deleted the addition. Thus, ground No. 1 of the appeal of the ld. Assessing Officer is dismissed. Deemed dividend under Section 2(22)(e) - HELD THAT:- We hold that the Tribunal was correct in holding that the amounts advanced for business transaction between the parties, namely, the assessee company and M/s. Pee Empro Exports (P) Ltd. was not such to fall within the definition of deemed dividend under section 2(22)(e). The present appeal is therefore dismissed The transactions in the client ledger accounts, are transactions entered in the ordinary course of business and are relating to sale/purchase of share/currency/derivatives/commodities only. Therefore, I further hold that since these transactions are trading/business transactions, accordingly, provisions of section 2(22)(e), do not apply to the facts of the case of the appellant. Accordingly, the addition made by the A.O. on account of deemed dividend is hereby deleted. Capital gain computation - claim of the depreciation on the block of the “building‟ owned by the assessee and used for the purposes of the business of the assessee on which depreciation is claimed - calculating the depreciation the provisions of Section 50C - HELD THAT:- Merely because the seller agreed to pay and discharge the outstanding dues and liabilities in respect of the share in the premises , it does not amount that the assessee has not transferred/sold the property during the year. Depreciation is allowable to the assessee on the written down value which is defined under section 43 (6) of the act. According to the subsection 43(6)( C ) (i)(b) the block of the assets is to be reduced by the monies payable in respect of any asset falling within that block which is sold or discarded or demolished or destroyed during the previous year. Therefore, definitely assessee has sold during the year this immovable property by which the written down value of the block of the asset should be reduced. Now the question is whether it should be reduced by the value as determined under section 50C of the act or actual money received by the assessee. The provisions of section 50C cannot be incorporated in the computation of block of the assets for the simple reason that it only substitutes the “full value of the consideration received or accruing as a result of transfer for the purposes of section 48‟ only. We direct AO to reduce the written down value of the asset only by ₹ 2 crores, which has been received by the assessee on sale of the above property. Accordingly ground number 2 and 3 are disposed off holding that assessee has requested to reduce Written down value of Building block by ₹ 2 crores being the actual sale consideration instead of ₹ 2 8714500 being the Stamp duty value of the property is acceded to. Thus, opening double DVD of the block building stood at ₹ 3 5197290/– is required to be reduced by ₹ 2 crores only, thereby the WDV remains of ₹ 1, 51,97,290/- on which the assessee would be entitled to the depreciation @ 10 % amounting to ₹ 15,19,729/–, against which the assessee has claimed depreciation of ₹ 35,19,729/– therefore difference of the depreciation excess claimed by the assessee is ₹ 20 lakhs instead of ₹ 2963061/–. Thus excess depreciation disallowance of ₹ 20 lakhs is confirmed. - Decided partly in favour of assessee.
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