9911796707
TMI Blog2019 (8) TMI 447X X X X Extracts X X X X X X X X Extracts X X X X ..... y, alleging that the plant and machinery have not been put to use for the purpose of the business of the appellant during the relevant assessment year, without appreciating the fact that the plant machinery was given on operating lease to the lessee. 2.1. The Ld. AO has vitiated the principle of natural justice by not giving proper opportunity of being heard to the appellant before disallowing the aforesaid claim of depreciation. That the Ld. AO has erred on facts and in law in disallowing security deposit written off amounting to Rs. 14,68,800 under section 37(1) of the Act, alleging that the same is in the nature of capital loss, without appreciating that the same is in the nature of business expense incurred by the appellant during the relevant assessment year for the purpose of the business of the appellant. 4. That the Ld. AO has erred on facts and in law in making disallowance under section 14A of the Act read with Rule 8D of the Income-tax Rules, 1962 amounting to Rs. 24,58,013, without appreciating the fact that the appellant has not earned any exempt income during the relevant assessment year. All of the above Grounds of Appeal are independent of and without prejud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1,22,61,807/-. The order of the Ld. AO is bad in law and on the facts to that extent, apart from being unjust. 2. That the Ld. AO has grossly erred on facts and in law in disallowing the claim of depreciation on plant and machinery amounting to Rs. 5,79,130/-, alleging that the plant and machinery have not been put to use for the purpose of the business of the appellant during the relevant assessment year, without appreciating the fact that the plant & machinery was given on operating lease to the lessee. 2.1. The Ld. AO has vitiated the principle of natural justice by not giving opportunity of being heard to the appellant before disallowing the aforesaid claim of depreciation. 3. That the Ld. AO has erred on facts and in law in disallowing the interest claim amounting to Rs. 1,52,76,998 being interest paid on borrowings. 3.1. The Ld. AO has vitiated the principle of natural justice by not giving opportunity of being heard to the appellant before disallowing the aforesaid claim of interest payment All of the above Grounds of Appeal are independent of and without prejudice to one another. Furthermore, the Appellant craves leave to add to or alter, by deletion, substitutio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... containing schedule to financial statements and page 251-to 55 of paper book containing schedule depreciation schedule forming part of tax audit report for assessment year 2008-09 to 2011-12, he submitted that no sale of such assets have taken place. 4.3 Ld.AR in written submission filed on 11/07/19 after hearing was concluded submits that, in preceding years assessing officer disallowed claim of depreciation, without appreciating fact that, these assets were part of block of assets since long, however to buy peace of mind and to avoid further litigation assessee did not file any appeal before appellate authorities for preceding years. 4.4 He placed reliance upon decision of Hon'ble Supreme Court in case of ICDS Ltd vs CIT reported in (2013) 29 Taxmann.com 129. 4.5 He further submitted that section 32 does not require assessee to receive lease rentals against lease of plant and machinery. The only requirement under section is that plant and machinery leased has to be owned by assessee and has been used by assessee for its business. He also placed reliance upon decision of Hon'ble Karnataka High Court in case of Manipal Finance Corporation Ltd vs ACIT reported in (2014) 49 Taxma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led subsequently on 11/07/19, there are no such agreements placed on record by Ld.AR in order to substantiate his claim. Further Hon'ble Kerela High Court in CIT vs Geo Tech Construction Corporation reported in (2000) 111 Taxman 373, referred to by assessee at page 481-483 of paper book has considered various decisions on this issue passed by Hon'ble Supreme Court and Hon'ble Bombay High Court, held as under: "Like every other animate and inanimate object, business premises, machinery, plant or furniture employed by an assessee in the course of his business, profession, etc has a limited effective life. The vigour, strength, capability etc of every such object gradually exhaust by the factors of use and time. These have undoubtedly aided assessee to earn income from such business or profession which is subjected to the levy of tax." 9. On perusal of various decisions relied upon by Ld.AR, it is observed that moot question considered by Hon'ble Courts therein is whether claim of depreciation against the assets was owned by assessee and/or it was put to use for purposes of business. None of these cases refer to a situation where, revenue doubts existence of plant and machinery. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d submissions advanced by both sides in the light of the records placed before us. 18. We have referred to computation of income and financial statements placed in paper book, relied upon by Ld.AR. Admittedly, there is no exempt income earned during the year by assessee. This issue therefore stands covered by the ratio laid down by Delhi Special Bench in case of ACIT vs Vireet Investments Pvt. Ltd. (supra). We therefore direct Ld.AO to delete disallowance computed under section 14 A while computing book profits. Accordingly this ground raised by assessee stands allowed. 19. Ground No. 3 is in respect of suo-moto disallowance computed by assessee under section 14A of the Act in regular provisions. It has been submitted by Ld.AR that disallowance computed by assessee may be considered on the basis of ratio laid down by Hon'able Delhi High Court in case of CIT vs Chem Investment reported in 378 ITR 33. 20. Ld. DR has objected to fact that this ground does not arise out of the order passed by Ld.CIT (A). 21. We have perused submissions advanced by both sides in the light of the records placed before us. It is a legal claim of assessee that by assessee inadvertently even though n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the hands of Vectra Advanced Engineering Pvt.Ltd., by way of secondary adjustment. 26. Ld.DR submitted that, disallowance has been rightly computed because assessee and Vectra Advanced Engineering Pvt.Ltd are loss-making companies. 27. We have perused submissions advanced by both sides in the light of the records placed before us. 28. Ld.AR tried to make a point on disallowance by submitting that loan advanced by assessee to Vectra Advanced Engineering Pvt.Ltd was due to prior commitments, being a group concern. Further there is no dispute regarding loan having not been advanced by assessee. Revenue is aggrieved with the fact that, assessee borrowed loan at 14% and advanced to Vectra Advanced Engineering Pvt.Ltd at 9% and thereby holding loan transaction, not at market price. One has to look into the transaction in an holistic way taking into consideration Commercial expediency. It is an agreed position that assessing officer cannot dictate a businessman how to conduct its business. However it also cannot be denied that the interest at which assessee has extended borrowed funds to its group concern is much low than SBI rate. We are therefore restricting the disallowance to ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
