TMI Blog2018 (11) TMI 389X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee & as a logical consequence allowed to be capitalized with under-construction building. The remaining expenditure of ₹ 18,92,167/- would be considered as revenue in nature and would be added with common repair & maintenance expenses Allowance of balance aggregate expenditure - Held that:- Since a particular manner of apportionment has been accepted by the Tribunal in AY 2006-07, respectfully following the same, we direct the Ld. AO to re-compute the disallowance after apportioning them on the basis of gross value of assets. The working of the same has been placed on page number 28 of the paperbook, a perusal of which reveal that the proportion of building in total assets is 45.56% and accordingly, the proportionate disallowance works out to be ₹ 18,86,364/- which shall stand revised to ₹ 27,48,365/- [45.56% of ₹ 60,32,408/-] in view of our adjudication in preceding para 5.1. The Ld. AO is directed to verify the proportion of the assets and if found correct, restrict the said disallowance to ₹ 27,48,365/- The assessee is directed to provide the working of the same to Ld. AO. Both these grounds stand partly allowed. Interest disallowance u/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owing a sum of ₹ 41,40,241/- out of the total repair expenditure incurred by the Appellant. 1:2 The Appellant submits that considering the facts and circumstances of its case and the law prevailing on the subject the repairs and maintenance expenditure to the extent incurred by the assessee for the purposes of its business is deductible while computing its total income. 1:3 The Appellant submits that the Assessing Officer be directed to delete the disallowance so made by him and to recompute its total income accordingly. 2:0 Re.: Disallowance of project expenses: 2:1 The Commissioner of Income-tax (Appeals) has erred in confirming the action of the Assessing Officer in disallowing a sum of ₹ 31,80,777/- out of the total project expenses incurred by the Appellant during the year under consideration. 2.2 The Appellant submits that considering the facts and circumstances of its case and the law prevailing on the subject the project expenses incurred were wholly and exclusively for the purposes of its business and are allowable as a deduction while computing its total income. 2:3 The Appellant submits that the Assessing Officer be dir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd other grounds that may be urged at the time of hearing, the decision of the CIT(A) may be set aside and that of the AO restored 2.1 Briefly stated the assessee being resident corporate entity engaged in Stud and Agricultural farm activity, racing activity and engaged as I.T. Infrastructure Service Provider was assessed by Ld. Assistant Commissioner of Income Tax (OSD)-I, City-2, Mumbai [AO] u/s 143(3) on 19/11/2007 wherein the business loss, Racing loss Loss from House Property has been determined at ₹ 588.12 Lacs, ₹ 33.29 Lacs ₹ 46.71 Lacs respectively as against aggregate returned loss of ₹ 969.78 Lacs filed by the assessee on 28/10/2005. 2.2 The fact on record reveal that the assessee had three business divisions i.e. horse-racing, stud farm and an Ozone IT Park division which consists of letting out of fit-outs / furniture on hire. The assessee had developed and created an I.T. Infrastructure park namely Ozone IT Park at Pune which has been let out since Assessment Year 2004-05. The income from horse-racing and stud farm is assessed as business income whereas income from letting out of premises was reflected under the h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee was entitled for statutory deduction of 30% against Income from House Property whereas another disallowance of ₹ 31.80 Lacs has been made since the same, in the opinion of Ld. AO, was capital in nature and was required to be capitalized as capital work-in-progress. So far as the expenditure of ₹ 31.80 Lacs is concerned, these expenses have been incurred on several buildings, some of which have already been capitalized in earlier years and some of which were under construction. The details of the same have been placed on page numbers 9 10 of the paper-book, the perusal of which reveal that an amount of ₹ 12,88,610/- have been incurred towards Building Number-3 which was under construction during the impugned AY and therefore, the same was required to be capitalized, irrespective of their nature, as rightly held by lower authorities. The remaining expenditure of ₹ 17,60,401/- ₹ 1,31,766/- pertains to Building Numbers 2 1B respectively which have already been completed and capitalized in earlier years and therefore, the same were allowable to the assessee as revenue expenditure, being routine expenditure in nature. Resultantly, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which was erroneous and was not warranted for. We concur with these submissions. While upholding the stand of Ld. CIT(A) in restoring the issue to the file of Ld. AO, we direct Ld. AO to consider the issue after re-appreciation of factual matrix and decide the same as per law with a direction to the assessee to substantiate his claim. The ground stand allowed for statistical purposes. The revenue, in its appeal, is aggrieved by the aforesaid directions of first appellate authority. However, since the findings of Ld. AO is based on erroneous assumption of facts, the issue has rightly been restored to the file of Ld. AO. The revenue s appeal stand dismissed. 5.4 The last addition of ₹ 10.27 Lacs stem from the fact the assessee claimed loss on discarded live stocks [horses] u/s 36(1)(vi). As per assessee s submissions, these horses were medically unfit for breeding and had no commercial use. The original cost of such livestock was claimed as deduction u/s 36(1)(vi). The said claim has been disallowed in view of the fact that the horses had not died and would fetch some value in the market, which assessee had not accounted for. In the absence of any corroborative evidence, th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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