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2016 (4) TMI 1115 - ITAT AMRITSAR

2016 (4) TMI 1115 - ITAT AMRITSAR - TMI - Long term capital gain - apportionment of WDV - Held that:- Assessing Officer had made this addition on protective basis however, since this addition was not made in Asst. Year 2010-11, therefore, the addition was treated as substantive in the year under consideration. The facts in this regard are that the assessee had declared sale of land and building at ₹ 1.20 croes. The Assessing Officer held that since building was a depreciable asset, therefo .....

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taken by assessee towards building on which depreciation was claimed in earlier years, therefore, the cost of acquisition of land was taken as Nil and thereby he calculated long term capital gain to the tune of ₹ 1 Crore. The learned CIT(A), on the other hand, apportioned the written down value of land and building as on 31.3.2008 between land and building on the same ratio on which Assessing Officer had apportioned the sale consideration between land and building and therefore, cost of ac .....

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ost Accountant ) For the Respondent : Sh. R.K. Sharda ( DR ) ORDER Per T. S. Kapoor (AM) These are cross appeals filed by assessee as well as by Revenue against the order of learned CIT(A), Jammu, dated 29.04.2013 for the Asst. Year 2009-10. 2. The grounds of appeal taken by assessee as well as by Revenue are reproduced below. 2.1 The following grounds has been taken by the assessee. (i) The Ld. CIT(A) has erred in law and facts by confirming addition of ₹ 6,74,210/- u/s 14A of the Income .....

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eted. (iv) The Ld. CIT(A) has erred in law and facts by confirming addition of ₹ 7,50,000/- on account of depreciation. The addition is bad in law, unjustified and liable to be deleted. Whereas the following grounds has been taken by the Revenue. (i) On the facts and circumstances whether the Ld. CIT(A) was right in deleting the disallowance of ₹ 1,50,000/- made on account of medical expenses when the assessee had failed to furnish any break up of the expenses as well as the supporti .....

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ces whether the Ld. CIT(A) was right in determining the long term capital gain on land at ₹ 42,48,533/- instead of long term capital gain of ₹ 1,00,00,000/- determined by the Assessing Officer when the case of CIT vs. Yamuna Syndicate Ltd. (2007) 162 Taxman 167 relied upon the Ld. CIT(A) is entirely distinguishable from this case as the assessee had claimed depreciation on the building in earlier years which includes cost of land. 3. At the outset, the learned AR invited our attentio .....

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ssessee some how found that order and filed the appeal and that is why a delay of 168 days has occurred. The learned AR in this respect submitted that assessee has filed a duly sworn affidavit in this respect. In view of the above, it was prayed that delay in filing of the appeal may be condoned. 4. The learned DR, however objected to condonation of delay, However, keeping in view the substantial justice we condoned the delay in filing of appeal and learned counsel was allowed to proceed on the .....

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e parties are in appeal before this Bench. 7. Arguing upon Ground No.1, in his appeal the learned AR submitted that the sustaining of addition made by Assessing Officer u/s 14A was not based upon the facts as assessee had not utilized any borrowed funds for the purchase of shares and in this respect invited our attention to written submissions filed by him wherein he had submitted that all loans were utilized for business purposes and no investment was made in the shares out of borrowed funds. H .....

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of exempt income before making any disallowance u/s 14A of the Act. The learned AR also relied upon the decision of ITAT Delhi Benches in the case of DCIT vs. Maharashtra Seamless Ltd., for the proposition that where in the case of mixed funds, it is not possible to ascertain as to whether investment in tax free bonds is from borrowed funds on assessee s own funds no disallowance was warranted. The learned AR further submitted that in Asst. year 2010-11 similar disallowance u/s 14A was made in .....

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dition was made. Assessee on the basis of such closing stock had taken the amount of ₹ 3,40,00,000/- as opening stock instead of ₹ 25,31,09,88/-. He submitted that assessee had taken this figure of opening stock on the basis of closing stock as determined by Assessing Officer himself and therefore, assessee had revised return of its income for Asst. Year 2008-09, however, Assessing Officer did not allow such claim of assessee and assessment in Asst. Year 2008-09 was completed at the .....

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made an addition of ₹ 2,40,490/- which the learned CIT(A) had restricted to 1/3 of such expenditure whereas the leaned CIT(A) should have allowed the total relief as all the expenses were related to business of the assessee. 10. Arguing upon the ground No.4, regarding confirmation of addition of ₹ 7,50,000/- on account of disallowance of depreciation claimed on the property the learned AR submitted that though the sale deed of property in question has been executed in the next financ .....

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A) of the same to Rs,30,000/- was not based upon the facts as learned CIT(A) should have allowed the complete relief to the assessee. 12. The learned DR, on the other hand, heavily relied upon the orders of authorities below. 13. Arguing upon the appeal filed by the Revenue, the learned DR submitted that the learned CIT(A) had wrongly allowed the relief to the assessee and he heavily placed his reliance on the assessment order. 14. We have heard the rival parties and have gone through the materi .....

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or in the case of M/s Mayank Auto Engineers (Pvt.) Ltd. in which the Delhi Benches has passed order in ITA No. 1567/Del)2013 on 25.03.2015 and in this case the Tribunal relied upon the decision of Delhi High Court in the case of CIT vs. Holcim India Pvt. Ltd. in ITA No. 486/2014 and 299/2014 has held that where there is no exempt income the disallowance u/s 14A cannot be made. The findings of Hon ble Delhi High Court in the case of CIT vs. Holcim India Pvt. Ltd.(supra) in ITA No. 1567/Del/2013 a .....

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ly, the CIT(A), though it is not argued before us, had taken the stand that the respondent- assessee had made investment and expenditure was incurred to protect those investments and this expenditure cannot be allowed under Section 14A. 14. On the issue whether the respondent-assessee could have earned dividend income and even if no dividend income was earned, yet Section 14A can be invoked and disallowance of expenditure can be made, there are three decisions of the different High Courts direct .....

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ncome was earned. The second decision is of the Gujarat High Court in Commissioner of Income Tax-I Vs. Corrtech Energy (P.) Ltd. [2014] 223 Taxmann 130 (Guj.). The third decision is of the Allahabad High Court in Income Tax Appeal No. 88 of 2014, Commissioner of Income Tax (Ii) Kanpur, Vs. M/s. Shivam Motors (P) Ltd. decided on 05.05.2014. In the said decision it has been held: "As regards the second question, Section 14A of the Act provides that for the purposes of computing the total inco .....

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in the absence of any tax free income, the corresponding expenditure could not be worked out for disallowance. The view of the CIT(A), which has been affirmed by the Tribunal, hence does not give rise to any substantial question of law. Hence, the deletion of the disallowance of ₹ 2,03Js2/ made by the Assessing Officer was in order". 15. Income exempt under Section 10 in a particular assessment year, may not have been exempt earlier and can become taxable in future years. Further, wh .....

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ber of shares and thereby securing right to management. Possibility of sale of shares by private placement etc. cannot be ruled out and is not an improbability. Dividend mayor may not be declared. Dividend is declared by the company and strictly in legal sense, a shareholder has no control and cannot insist on payment of dividend. When declared, it is subjected to dividend distribution tax. 16. What is also noticeable is that the entire or whole expenditure has been disallowed as if there was no .....

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was incurred for business activities was not doubted by the Assessing Officer and has also not been doubted by the CIT(A). 17. In these circumstances, we do not find any merit in the present appeals The same are dismissed in limine 16. As we have observed that whether there was any exempt income in the year under consideration or not is not coming out from the material on record, therefore, it is appropriate to ascertain if there was any exempt income at all and if there is no exempt income the .....

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case laws relied upon by assessee. In view of the above, Ground No.1 is allowed for statistical purposes. 17. Now coming to Ground No.2, regarding issue of claim of assessee that the difference in opening and closing stock has already been considered in Asst. Year 2008-09 also needs verification at the end of Assessing Officer who on the basis of records available with him will examine as to whether in Asst. Year 2008-09, the Assessee had been taxed for the difference in opening and closing stoc .....

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oduce some of the bills/ vouchers for site expenses. The learned CIT(A) has further allowed relief to the assessee by confirming the disallowance only up to ₹ 80,163/- representing further 30% of disallowance. We find that the order of leaned CIT(A) is quite reasonable and we do not find any infirmity in the same, therefore, Ground No.3 is dismissed. 19. As regards the addition on account of depreciation, we find that the Assessing Officer had disallowed the claim of depreciation by holdin .....

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s, therefore, it cannot be said to have been utilized for business purposes. Before us also the assessee could not bring out anything against the findings of Assessing Officer and learned CIT(A), therefore, keeping in view the facts and circumstances of the case Ground No. 4 is dismissed. 20. As regards Ground No.5 relating to disallowance of medical expenses, we find that learned CIT(A) has restricted the disallowance from ₹ 1,50,000/- to ₹ 30,000/- only which is reasonable sustenan .....

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peal the Revenue has taken the figure of disallowance at ₹ 1,50,000/-. We find that learned CIT(A) has upheld the addition of ₹ 30,000/- against the disallowance of ₹ 1,50,000/- which the Assessing Officer had made. The relief given by learned CIT(A) is a reasonable one as the entire medical expenses of ₹ 1,50,000/- cannot be disallowed, therefore, Ground No.1 of Revenue s appeal is dismissed. 22. Ground Nos. 2 & 3 relates to the addition made by Assessing Officer to .....

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