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TMI Blog2014 (6) TMI 988X X X X Extracts X X X X X X X X Extracts X X X X ..... a is not satisfied then the provisions of section 43A are not attracted. In order to cull out the facts, we deem it fit to restore this issue back to the file of Assessing Officer to determine the facts of the case. Disallowance on account of processing fee against the ECB loan - Held that:- The matter has been remitted back to the file of Assessing Officer against ground No. 2(a) in order to determine the nature of the ECB loan taken by the assessee. In case the said loan has been taken during the course of carrying on of the business, the expenditure incurred on processing fee is to be allowed as expenditure in the hands of the assessee. However, in case the said loan is utilized for the acquisition of assets from a country outside In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order passed u/s 250(6) by the Ld. Commissioner of Income lax (Appeals) is against law and facts on the file in as much as he was not justified to arbitrarily uphold action of the Ld. Assessing Officer in disallowing interest on capital-work-in progress amounting to ₹ 12,805/-. 2. That he was further not justified to uphold the action of the Ld. Assessing Officer in: a) disallowing a sum of ₹ 6,95,000/- towards exchange difference by resort to provisions of section 43A. b) disallowing a sum of ₹ 3,05,735/- out of processing fee against ECB by wrongly treating the same as a capital expenditure. 3. That he further gravely erred in upholding the disallowance of ₹ 50,000/- by resort to provisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll the asset is first put to use for the purpose of business has to be capitalized. The Assessing Officer, thus treated a sum of ₹ 6,95,000/- as a capital loss and capitalized the same under the head Plant Machinery on which depreciation @ 15% was allowable. However, depreciation @ 7.5% was allowed as the asset was put to use for a period less than 180 days and the net addition was made at ₹ 642,875/-. 7. Before the Commissioner of Income Tax (Appeals), the submission of the assessee was that the loans were availed much later than the date of putting to use the respective assets. As per the ld. AR for the assessee, as contended before the Commissioner of Income Tax (Appeals), the provisions of section 43A were not applicab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the assessee had raised the said ECB loan from Citi Bank and from GE Capital against various assets during the year. However, the case of the assessee before the Commissioner of Income Tax (Appeals) was that the provisions of sec43A were not applicable as the foreign exchange was not on account of borrowing for the purpose of imported machinery. The assessee has filed a Paper Book which is available on record. However, it is not clear from the documents available on record whether the assessee had utilized the said foreign exchange for the purpose of acquisition of machinery from any country outside India. In case the basic condition of acquisition of asset from outside India is not satisfied then the provisions of section 43A are not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ating to the issue are that during the year under consideration, the assessee had earned dividend income of ₹ 279,170/- and also agricultural income of ₹ 45,000/-. The Assessing Officer in view of the investments made by the assessee invoked the provisions of section 14A of the Act and disallowed a sum of ₹ 1,00,000/- out of general and administrative expenses and financial expenses relatable to earning of exempt income. The said disallowance was restricted to ₹ 50,000/- by the Commissioner of Income Tax (Appeals) against which the assessee is in appeal. The year under appeal is assessment year 2006-07 and the provisions of section 8D are not applicable and in view thereof, we restrict the disallowance to ₹ 20, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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