2015 (2) TMI 494 - AT - Income Tax

Disallowance of expenses - CIT(A) allowed claim in part- Held that - With regard to the expenses, we notice that the Ld CIT(A) has analysed each expense and has given proper reasoning to allow the same. As noticed earlier, the Ld CIT(A) has confirmed disallowance of transfer charges and car expenses. Since we have confirmed the decision of the Ld CIT(A) that the hoarding charges and trading in silver are required to be assessed as Business income, we do not find any infirmity in the decision of Ld CIT(A) in directing the AO to allow the expenses claimed. Accordingly we uphold his order on this issue. - Decided against revenue. Assessment of gain arising on sale of Pune land - claim of deduction u/s 54EC - Held that - All the sequences in the case would show that the assessee has continued to hold the land as its Capital asset. Under these circumstances, we are of the view that the Ld CIT(A) was justified in holding that the gain arising on sale of land should be assessed as Long term Capital gain only. Consequently the Ld CIT(A) was also justified in holding that the assessee can claim deduction u/s 54EC of the Act, subject to the fulfillment of conditions prescribed in that section.- Decided against revenue. Disallowance of Car expenses in respect of the Car owned by a Director - Held that - When it was asked as to whether the company has passed any resolution in respect of the Car expenses of the director or was there any agreement between the assessee company and the director with regard to the usage of car, the Ld A.R fairly admitted that the assessee did not possess such kind of documents. In the absence of any agreement or any other document to support the claim of the assessee, we have no other option, but to confirm the order passed by Ld CIT(A) on this issue. - Decided against assessee.

Issues:
1. Disallowance of Expenses
2. Income from sale of Land & Deduction allowed u/s 54EC
3. Disallowance of Depreciation, interest on car loan, and car expenses
4. Disallowance made u/s 14A of the Act

Analysis:

1. Disallowance of Expenses:
The appellant challenged the decision of the Ld CIT(A) in granting relief on the disallowance of expenses related to hoarding charges/compensation and trading in silver. The AO assessed the hoarding charges as rental income and the silver transaction as income from other sources. However, the Ld CIT(A) held that these incomes should be assessed as business income. The Ld CIT(A) also confirmed certain expense disallowances. The tribunal upheld the Ld CIT(A)'s decision, stating that the expenses were properly analyzed and allowed, considering the nature of the income as business income.

2. Income from sale of Land & Deduction allowed u/s 54EC:
Regarding the sale of land in Pune, the AO treated the gain as business income due to past development plans. However, the Ld CIT(A) found that the land was held as a capital asset and assessed the gain as long-term capital gain. The tribunal agreed with the Ld CIT(A) that the gain should be treated as long-term capital gain. The Ld CIT(A) directed the AO to verify the conditions for allowing deduction u/s 54EC. The tribunal upheld this decision based on the continuous holding of the land as a capital asset by the assessee.

3. Disallowance of Depreciation, interest on car loan, and car expenses:
The appellant contested the disallowance of depreciation, interest on a car loan, and car expenses related to a car owned by a director. The Ld A.R argued that the car was used solely for business purposes. However, without supporting documentation like agreements or resolutions, the tribunal upheld the Ld CIT(A)'s decision to disallow these expenses.

4. Disallowance made u/s 14A of the Act:
The appellant did not press the grounds related to the disallowance made u/s 14A of the Act during the appeal. As a result, the tribunal dismissed the grounds related to this issue.

In conclusion, the tribunal dismissed both the appeal filed by the revenue and the appeal filed by the assessee, upholding the decisions made by the Ld CIT(A) on the various issues raised in the case.

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