TMI Blog2015 (10) TMI 2105X X X X Extracts X X X X X X X X Extracts X X X X ..... cost of machineries can be added in the cost of land purchased for raising flats and building. The machineries never became the part of business asset of the assessee, as the assessee was never engaged in any manufacturing activity. Therefore, the alleged short term capital loss as claimed by the assessee on sale of machineries cannot be allowed, as the machineries were never purchased for its use in the business of the assessee. The total cost of land may be increased by the alleged loss suffered in sale of machineries. In the light of these facts, we do not subscribe the view of the ld. CIT(A) on this issue and accordingly we set aside his order in this regard and restore that of the Assessing Officer. - Decided against assessee. Disal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e i.e. for what purpose the plant and machinery was purchased and in which circumstances the same was sold immediately, after bearing such huge loss. 2. The Commissioner of Income Tax (Appeals), Lucknow has erred in law and on the facts of the case by treating the loss of ₹ 82,97,750/- as loss incidental to trade, ignoring the decision given by the Hon'ble Apex Court in case of Calcutta Co. Ltd., Vs. CIT(1959) 37/TR1 (SC) wherein it has been held that the general commercial principle has to be kept in view while determing real and true profit of a business or profession. 3. The Commissioner of Income Tax (Appeals), Lucknow has erred in law and on the facts of the case in deleting the addition of ₹ 13,13,918/- made out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apital Loss (82,97,750-6,18,929) (-) 76,78,821 4. The assessee was asked to justify its claim and in response thereto it was submitted that the land along with plant machinery was purchased for ₹ 2.70 crores only. Out of above, the plant machinery was valued at ₹ 1.05 crores by the bank and was sold for a price of ₹ 22,02,250/- and the loss on sale of above asset was claimed at ₹ 82,97,750/-. The Assessing Officer was not convinced with the explanation of the assessee and he observed that the total area of the factory land was 14730 sq. mtrs. was purchased as business project being the assessee engaged in the business of construction and development of building, flats, etc. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... along with plant machinery was in order to use the land for raising construction thereon and not to run the industry. Therefore, the loss as claimed on sale of machinery cannot be called to be business loss or short term capital loss to the assessee. The assessee has in fact purchased factory building along with machinery knowing fully well that the machineries were not of its use, as the assessee was not engaged in any such type of business activities in which such machineries can be used. The machineries are just like a scrap for him, therefore, the loss claimed in sale of machineries cannot be allowed. The short term capital loss could have been allowed, if the assessee has sold the entire factory building at a lesser price. The ld. D. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Marg project and interest amounting to ₹ 4,29,864/- on term loan for China Gate project. Though the assessee has reserve and surplus of ₹ 12,98,89,122/-, the assessee has given interest free loan of ₹ 50 lakhs to Naveen Gupta and ₹ 10 lakhs to Priti Gupta during the year. Besides loan of ₹ 20 lakhs was also given to Shri. Y.K. Jain and ₹ 6 lakhs to Rahul Jain. Since the assessee had diverted the borrowed funds in interest free loans, the Assessing Officer has disallowed the interest and finance charges amounting to ₹ 13,13,918/-, against which an appeal was filed before the ld. CIT(A) with the submission that the borrowed funds from the bank was utilized in the business activities of the assessee. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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