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ACIT-Cent. Cir-6 (2) (Earlier CC-35) , Mumbai Versus M/s. Gannon Dunkerly and Co. Ltd.

2016 (10) TMI 411 - ITAT MUMBAI

Disallowance u/s.14A - Held that:- We find that interest free funds available to assessee were more than the investment made by assessee during the year, that borrowed funds were not used for earning exempt income, that FAA had given categorical finding of fact that assessee had sufficient own funds for making investment. - ITA/7141/Mum/2014 - Dated:- 25-8-2016 - Shri Rajendra,Accountant Member and Ram Lal Negi,Judicial Member For The Revenue : Shri K.V. Vispute-DR For The Assessee : Shri P.H. M .....

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restricting the disallowance to ₹ 4,30,550/- u/s.14A of the Act.During the course of assessment proceedings,the AO found that the assessee had claimed exempt income of ₹ 1.68 lakhs u/s. 10(34) of the Act being dividend on shares.He , vide questionnaire dated 29.12.2012,sought details of inadmissible expenses within the meaning of section 14A of the Act r.w.r 8D of the I.T.Rules, 1962.The assessee in its reply stated that relevant investment yielding exempt income has been made out of .....

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ssessee preferred an appeal before the First Appellate Authority(FAA).Before him,it was argued that investment in shares was made in earlier years and not during the year,that the investments were made prior to AY.1997-98 and that own funds were utilized for making investment,that the assessee had adequate interest free funds and that no borrowed funds were used to make the investments, that no direct expenditure was incurred by the assessee during the year under appeal, that the assessee had on .....

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of interest bearing funds in making investment,that the AO was not justified in making disallowance on account of interest expenditure.He restricted the disallowance to ₹ 4.30, lakhs following the order of his predecessor for the AY 2009-10. 2.3. During the course of hearing before us,the Departmental Representative (DR) supported the order of AO the Authorised Representative (AR) referred to the case of HDFC Bank Ltd. (ITA No330 of 2012, dt.23.7.14) of the Hon ble Bombay High Court and Jo .....

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al finding of fact that assessee had sufficient own funds for making investment.Therefore, respectfully following the cases relied upon by assessee,we hold that the order of the FAA does not suffer from any legal infirmity.Confirming his order Ground No.1 is decided against the AO. 3. Second ground of appeal pertains to depreciation.Representatives of both the sides agreed that the issue stands allowed by the order of the Tribunal for the AY.s. 2007-08 & 2008-09 (ITA.s/5263,6151 & 5716/M .....

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2) of the Act. The AO was of the opinion that since the assessee is engaged in construction and Civil Engineering therefore it is not engaged in the business of manufacture or production of any article or thing therefore sought explanation from the assessee to justify its claim of additional depreciation. 12. The assessee filed a detailed reply giving details of various items purchased and installed under the head plant and machinery. It was explained to the AO that the assessee was granted bene .....

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The AO following the observations of the Hon'ble Supreme Court disallowed the claim of additional depreciation of ₹ 1,53,19,184/-. 13. The assessee agitated this matter before the Ld.CIT(A) and explained that the issue has been settled in favour of the assessee by the decision of the Tribunal in assessee's own case in ITA No. 6333/Bom/1989 for assessments 1979-80,1984-85 and 1985-86. It was pointed out that the department has accepted the decision of the Tribunal except for A.Y. 19 .....

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ettled in favour of the assessee by the decision of the Tribunal and the Jurisdictional High Court . The ld.CIT(A) also observed that while deciding the issue in favour of the assessee, the Tribunal has considered the decision of the Hon'ble Supreme Court relied upon by the A.O. The ld.CIT(A) concluded that the assessee company s business activity to the extent of 15% amounts to manufacturing activities and therefore eligible for deduction of additional depreciation. 14. Aggrieved by this fi .....

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Rebutting the arguments of the Ld. DR, the Ld. Counsel for the assessee pleaded that it is well settled that rule of consistency should be followed. For this proposition, the Ld. Counsel relied upon the decision of the Hon'ble Supreme Court in the case of Radhasoamy Satsang Vs CIT 193 ITR 321. It is the say of the Counsel that once this issue has been decided in favour of the assessee in assessee's own case by the Tribunal and the Jurisdictional High Court, the same view should be taken .....

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