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2020 (2) TMI 1351 - AT - Income TaxDisallowance of wages - Whether adhoc disallowance should be deleted? - CIT (a) restricted the disallowance to 10% of wages expense as against about 20% disallowance made by the AO -HELD THAT -. Assessee has not furnished any comparison chart of wages expenses percentage in the present year and earlier years. Hence, we decline to interfere in the order of CIT (A) on this issue. Accordingly, Ground No. 3 is rejected. Disallowance of Site Expenses - HELD THAT - AO should have highlighted some anomalies in the claim. Thereafter he observes that the AO notes in general terms in the remand report that bills/vouchers were not produced in full for verification and still, he partly confirmed the disallowance to the extent of ₹ 1 Lac out of ₹ 5 Lacs disallowed by the AO. In view of these findings of CIT (A) as noted above, we are of the considered opinion that in the facts of the present case, no disallowance is justified and hence, we delete this disallowance. Ground No. 4 is allowed. Disallowance of cost of super structure - HELD THAT - For a building constructed for letting out, there is no provision in the act to allow the cost of construction as revenue expenditure. Since, major portion of the building in the present case is already let out, this building is a letout building and not business building. Hence, in our considered opinion, this judgment of TVS Lean Logistics 2007 (6) TMI 44 - HIGH COURT, MADRAS is not applicable in the facts of the present case. Accordingly, Ground No. 5 is rejected. Disallowance towards the lease rent - HELD THAT - As per the computation available additions made on account of lease rent but the same is claimed as deduction while computing income from house property and the AO disallowed so claimed by the assessee and there is no separate disallowance - contention that there is double disallowance is not correct because deduction is very much claimed in the computation available and it is disallowed by the AO by observing that for computing income under the head house property, deduction on account of ground rent is not allowable. We find no infirmity in the order of CIT (A) on this issue. Ground No. 6 is also rejected. Disallowance of claim for amortization of the cost of the letout property - HELD THAT - Since, no deduction is in fact allowable u/s 23 24 of the I T Act about cost of building let out even if constructed on lease hold land and for computing annual rent u/s 22 23, what is relevant is the amount of rent received or receivable and there is no scope of any deduction on account of diversion of a portion of income at source, we hold that this claim of the assessee is not allowable. Ground No. 7 Rejected.
Issues:
1. Disallowance of wages expense 2. Disallowance of site expenses 3. Disallowance of cost of super structure 4. Disallowance of lease rent 5. Disallowance of amortization of letout property cost 6. Interest u/s 234D Analysis: 1. The first issue pertains to the disallowance of wages expense. The AO had made an adhoc disallowance, which was partly confirmed by the CIT (A). The tribunal declined to interfere with the CIT (A)'s decision as the assessee failed to provide a comparison chart of wages expenses percentage in the present and earlier years. Consequently, Ground No. 3 was rejected. 2. The second issue involved the disallowance of site expenses. The AO had disallowed a sum, which was reduced by the CIT (A). The tribunal, after considering the facts, found no justification for the disallowance and deleted the amount. Therefore, Ground No. 4 was allowed. 3. The third issue focused on the disallowance of the cost of super structure. The assessee claimed that a portion of the building used for business should be allowed as revenue expenditure. However, the tribunal held that since a major portion of the building was let out, the claim was not applicable. Therefore, Ground No. 5 was rejected. 4. The fourth issue concerned the disallowance of lease rent. The tribunal observed that there was no double disallowance as claimed by the assessee, and the AO's decision to disallow the lease rent was upheld. Hence, Ground No. 6 was rejected. 5. The fifth issue addressed the disallowance of amortization of the cost of the letout property. The tribunal referenced previous tribunal orders and held that the claim was not allowable under the relevant sections of the Income Tax Act. Consequently, Ground No. 7 was rejected. 6. The final issue related to interest u/s 234D, which was deemed consequential, and no further adjudication was required. The appeal was partly allowed by the tribunal. In conclusion, the tribunal's judgment addressed various disallowances made by the AO, with some being upheld and others being deleted based on the facts and legal provisions. The detailed analysis of each issue provides clarity on the reasoning behind the tribunal's decisions.
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