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2019 (6) TMI 1372 - AT - Income TaxDeduction u/s 54F - claim of deduction disallowed by the AO for the reason that on the date of transfer of land assessee has owned more than one residential house - assess contention that he has demolished one house for new comstruction - HELD THAT - As noted that assessee has produced application that was filed by the assessee only in November 2009 requesting for permission for development of plot and in the building plan submitted before PMC authorities the existing building which was claimed to have been demolished in May 2009 was shown as to be demolished . He therefore concluded that to be demolished proved beyond doubt that the existing bunglow was not demolished till June / July 2010. He also noticed that the property tax in respect of the said property was paid as applicable for residential house and not for open plot even for the year 2009 and 2010. CIT(A) therefore did not accept the claim of the assessee that the existing construction of the property was demolished and the property became a vacant plot on the date of transfer of land. With respect to other residential properties owned by assessee CIT(A) has given a finding that assessee owns three flats and that since the assessee was the owner of more than one residential house as on the date of transfer of land he was not eligible for deduction u/s 54F of the Act. - Decided against assessee. Depreciation on the civil foundation work of windmill - rate of depreciation applicable is 10% as civil structure or 80% being the rate applicable to windmill - HELD THAT - We find that the identical issue has been decided by the Hon ble Bombay High Court in the case of CIT Vs. Cooper Foundary Pvt. Ltd 2011 (6) TMI 837 - BOMBAY HIGH COURT in assessee s favour wherein it had upheld the order of Tribunal granting depreciation @ 80% on the foundation cost incurred for installation of windmill. Before us Revenue has not placed any contrary binding decision in its support. We therefore relying on the aforesaid decision of Hon ble Bombay High Court hold that on the cost incurred for installation of windmill the depreciation is to be allowed at the rate which is applicable to windmill. We direct accordingly and thus the ground of the assessee is allowed. Deemed rental income of residential house u/s 23(4) - Case of assessee that the residential houses owned by assessee are his stock-in-trade and therefore no addition on account of deemed rent can be made - HELD THAT - We find that Ld.CIT(A) while upholding the addition has given a finding that three flats at Lake Town were held by the assessee as capital assets and were not business assets of the assessee. With respect to bunglow at Prabhat Road he has noted that the bunglow was not demolished as on 31.03.2010 and thus the assessee owned more than one house during the year and therefore additions made by AO was as per the provisions of Sec.23(4). Before us no material has been placed by Ld.A.R. to point out any fallacy in the findings of Ld.CIT(A). We therefore find no reason to interfere with the order of Ld.CIT(A) and thus the ground No.3 of assessee is dismissed. Disallowance u/s 14A - HELD THAT - We find that while upholding the disallowance Ld.CIT(A) has noted that proper satisfaction was recorded by AO before disallowing expenses. He has further noted that substantial investments were made by the assessee and therefore the contention of the assessee that no expenses have been incurred for earning exempt income cannot be accepted. He has also noted that disallowance has been made for administrative expenses under Rule 8D(2)(iii) of the I.T. Rules. Before us no fallacy in the findings of Ld.CIT(A) has been pointed out by Ld.A.R. We therefore find no reason to interfere with the order of Ld.CIT(A) and thus the ground No.4 of assessee is dismissed. Disallowance on adhoc basis on account of personal element - HELD THAT - We find that while upholding the order of AO CIT(A) has noted that assessee was not in a position to furnish any log book indicating the use of vehicles for exclusive and wholly for the purpose of business and that assessee was also not having any personal vehicles to show that it was used for personal purposes. Even with respect to disallowance on account of conveyance and travelling he has noted that no evidence to support his case was filed before Ld.CIT(A).
Issues Involved:
1. Denial of claim of deduction under Section 54F. 2. Depreciation on windmill. 3. Addition on account of deemed rental income. 4. Disallowance under Section 14A. 5. Adhoc disallowance of depreciation on vehicles. 6. Adhoc disallowance of traveling and conveyance expenses. Issue-wise Detailed Analysis: 1. Denial of Claim of Deduction under Section 54F: The assessee claimed a deduction under Section 54F of ?1,42,16,833/- for investment in a new residential bungalow and deposit in Capital Gains Accounts Scheme. The AO disallowed the claim as the assessee owned more than one house property on the date of transfer of the capital asset, which is against the provisions of Section 54F. The CIT(A) upheld the AO's decision, noting that the assessee did not provide sufficient evidence to prove that the old bungalow at Prabhat Road was demolished before the transfer date. Additionally, the three flats at Lake Town were considered capital assets, not business assets. The Tribunal upheld the CIT(A)'s decision, finding no reason to interfere with the factual findings. 2. Depreciation on Windmill: The AO restricted the depreciation on the civil work foundation of the windmill to 10%, following the decision in Poonawalla Fin Vs. ACIT. The CIT(A) upheld this decision. However, the Tribunal referred to the Bombay High Court's decision in CIT Vs. Cooper Foundary Pvt. Ltd., which allowed depreciation at 80% on the foundation cost incurred for the installation of the windmill. Thus, the Tribunal allowed the assessee's claim for higher depreciation. 3. Addition on Account of Deemed Rental Income: The AO added ?5,62,800/- as deemed rental income for properties held as stock-in-trade and under construction. The CIT(A) upheld the addition, stating that the three flats at Lake Town were capital assets, not business assets, and the bungalow at Prabhat Road was not demolished as claimed. The Tribunal found no reason to interfere with the CIT(A)'s findings and dismissed the ground. 4. Disallowance under Section 14A: The AO disallowed ?1,16,146/- under Section 14A, applying Rule 8D, as the assessee had earned tax-free income but did not disallow any expenses. The CIT(A) upheld the disallowance, noting that the AO had recorded proper satisfaction and substantial investments were made by the assessee. The Tribunal found no reason to interfere with the CIT(A)'s findings and dismissed the ground. 5. Adhoc Disallowance of Depreciation on Vehicles: The AO disallowed 10% of the depreciation on vehicles, amounting to ?2,31,974/-, due to the personal element in their use. The CIT(A) upheld the disallowance, noting that the assessee did not provide any logbook or evidence to show exclusive business use. The Tribunal upheld the CIT(A)'s decision, finding no reason to interfere. 6. Adhoc Disallowance of Traveling and Conveyance Expenses: The AO disallowed 10% of the traveling and conveyance expenses, amounting to ?20,471/-, due to the personal element in their use. The CIT(A) upheld the disallowance, noting that the assessee did not provide any evidence to support his claim. The Tribunal upheld the CIT(A)'s decision, finding no reason to interfere. Conclusion: The Tribunal partly allowed the appeal, granting relief on the issue of depreciation on the windmill while upholding the CIT(A)'s decisions on other issues.
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