TMI Blog2015 (10) TMI 1509X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 2,99,801/- on account of proportionate expenses out of indirect expenses incurred by the assessee, has been accepted by the assessee. Under these facts and circumstances, we find that the order of Ld. CIT(A) in deleting the disallowance on account of interest for ₹ 7,13,542/- is justified and no interference is called for in the order of Ld. CIT(A) on this issue. - Decided in favour of assessee. Disallowance of Depreciation on Imported Car. - CIT(A) deleted the addition - Held that:- Disallowance made by the AO was not justified. It has been observed by us that AO has not anywhere mentioned that the said car was not used for the purpose of business of the Baroda 7 Rayon Co. Ltd.. assessee company. The accounts of the assese ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as per the provisions of Section 14A(2) once the AO is not satisfied with the correctness of the claim of the assessee in respect of expenditure claimed, he has no option but to disallow such expenditure in accordance with method prescribed under Rule 8D(2)(ii) . 2. On the facts and in the circumstances of the case and in law, the Ld.CIT(A) erred in deleting the addition of ₹ 29,45,OOO/ - made by way of disallowance of Depreciation on Imported Car holding that the depreciation has already been allowed in earlier years, without appreciating the fact that in the course of assessment proceedings the assessee has failed to furnish any evidence to show that the Imported Car was used for the business purpose of the assessee company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed unpaid. It has been further submitted by the assessee company that it has in its possession huge amount of own funds which are far in excess of amount of investment made in shares. It has been further submitted that investment in shares has not been made out of borrowed funds. It is observed by us that the Ld. CIT(A) has given findings after appreciating the facts and circumstances of the case and evidences placed on record by the assessee company that as on 31.03.2008 the amount of tax free Baroda 4 Rayon Co. Ltd.. investment in the shares etc was to the tune of ₹ 5.99 crores, whereas as per the balance sheet of the assessee company, the Shareholder s Funds ( i.e., Share Capital Reserves Surplus) were to the tune of ₹ 28 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the case and judgment of Hon ble Bombay High Court in the case of Reliance Utilities Power Ltd (supra), we find that the assessee had sufficient funds in the form of Share Capital amd Reserves Surplus so as to enable it to make tax free investments. Further the exempt income is merely to the tune of ₹ 500/-, received in the form of dividend in the investments made in earlier years. It is further noted by us that the disallowance of ₹ 2,99,801/- on account of proportionate expenses out of indirect expenses incurred by the assessee, has been accepted by the assessee. Under these facts and circumstances, we find that the order of Ld. CIT(A) in deleting the disallowance on account of interest for ₹ 7,13,542/- is justi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y audit under the Companies Act 1956 and tax audit was conducted u/s 44AB of Income Tax Act 1961. The Ld. CIT(A) observed that the assessee company made the claim of depreciation on WDV value of the imported car which was included in the block of assets of the assessee company from earlier years and it was not case of purchasing of any car during the impugned year. It was further observed that since the depreciation had already been given in earlier years on this car, there was no justification on the part of the AO for not allowing depreciation on opening value of the WDV. 11. Having considered carefully the submissions of both the parties and findings of Ld. CIT(A), we find that the disallowance made by the AO was not justified. It h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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