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2015 (10) TMI 2105 - ITAT LUCKNOW

2015 (10) TMI 2105 - ITAT LUCKNOW - TMI - Short term capital loss - sale of plant & machinery as scrap - whether the assessee could not prove its motive 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? - CIT(A) treating the loss as loss incidental to trade - Held that:- Undisputedly the assessee is not engaged in any such business activities in which these machineries can be used. The assessee in f .....

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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.

Disallowance of interest and finance charge - CIT(A) deleted d .....

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nd that repair expenditures are not open for verification, as vouchers were not produced. The disallowance was restricted to 10% by the ld. CIT(A). We find no justification to disturb the findings of the ld. CIT(A) in this regard. Accordingly, we confirm the order of the ld. CIT(A) on this issue .- Decided against revenue. - ITA No.746/LKW/2014 - Dated:- 31-8-2015 - SHRI SUNIL KUMAR YADAV AND SHRI. A. K. GARODIA, JJ. For The Appellant : Shri. T.P. Singh, D.R. For The Respondent : Written Submiss .....

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umstances 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 pro .....

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s erred in law and on the facts of the case in restricting the disallowance made out of repairs of building and others to the extent of 10% against 20% as made by assessing officer even when he justified the making of disallowance of expenses by the Assessing Officer. 2. This appeal was listed for hearing on 22.7.2015, but none appeared on behalf of the assessee. However, written submission is filed on behalf of the assessee. Accordingly the Revenue was heard. 3. Apropos grounds No.1 & 2, it .....

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aim 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 p .....

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ng and not for the plant & machinery. The value of plant & machinery was immaterial for the assessee, therefore, no loss has been suffered by the assessee on sale of plant & machinery. At the most, the alleged loss claimed by the assessee would be added to the cost of land. He accordingly denied claim on loss of sale at ₹ 82,97,750/-. 5. The assessee preferred an appeal before the ld. CIT(A) with the submission that the valuation of plant & machinery was ascertained by the .....

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t the assessee was mainly engaged in the business of construction and development of building, flats, etc. The intention of the assessee to buy the factory land 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 f .....

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ded to the cost of land of the factory building. 7. Having carefully examined the orders of the lower authorities in the light of the rival submissions, we find that undisputedly the assessee is not engaged in any such business activities in which these machineries can be used. The assessee in fact was engaged in construction of building, flats, etc. Therefore, the factory building was purchased by the assessee only for construction of the building and flats. At the most, the cost of machineries .....

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neries. 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. 8. So far as ground No.3 is concerned, it is noticed that the assessee has claimed interest and finance charges at ₹ 13,13,918/- which includes interest amounting to ₹ 4,77,483/- on term loan for Gokhle Marg project and interest amounting to ₹ 4,29,864/- on term loan for China Gate proj .....

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h 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. Therefore, the payment of interest and finance charges to bank be allowed, as it was incidental to the business of the assessee. The assessee had sufficient reserve and surplus, out of which interest free advances were given. Therefore, in the light of the judgment of the jurisdictional High Court in the case of CIT vs. Kadico Khetan Ltd., .....

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