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2023 (4) TMI 87

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..... ral purposes - HELD THAT:- Since the assessee had undisputably leased four out of the five properties/go-downs for the purpose of storage of agricultural produce and there was discrepancy only with respect to one leased out go-down to Banas Dairy, the whole deduction claimed by the assessee could not be denied u/s. 35AD of the Act and in view of the provisions of section 35AD(7B) of the Income Tax Act as it stood at the relevant time, in our considered view, the CIT(A) had correctly restricted the disallowance only with respect to the godown leased out to Banas Dairy for the non-agricultural purposes. Appeal of the Department is dismissed. - ITA No. 1577/Ahd/2019 - - - Dated:- 21-3-2023 - Shri Waseem Ahmed, Accountant Member And Sh .....

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..... he parties i.e. Banas Dairy, the items stored in the go-down is skimmed milk powder. The Assessing Officer was of the view that the said item is not an agricultural produce. The Assessing Officer on reading of the section 35AD was of the view that the assessee shall be allowed deduction of capital nature for the purpose of specified business. Further, as per section 35AD, specified business was setting up and operating warehousing facilities for storage of agricultural produce . Considering the above product, the Assessing Officer was of the view that the assessee was not carrying out the specified business in respect of go-down leased to Banas Dairy, since Banas Dairy was using the godown for storing skimmed milk powder, which was not an .....

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..... mount of depreciation allowable in accordance with the provision of section 32, as if no deduction under this section was allowed shall be deemed to be the income of the assessee chargeable under the head Profits and gains of business or profession of the previous year in which the asset is so used. Thus, section 35AD itself provides that if any asset is not used for specified business for the specified period, specified in sub section (7A) of section 35AD then total amount of deduction has to be disallowed as if no deduction under this section was allowed. Therefore, total deduction claimed u/s 35AD is to be disallowed if any asset is used for a purpose other than specified business. In view of the said provisions, assessee's .....

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..... AD of the Act. Section 35AD grants; deduction in respect of expenditure incurred on specified; business. During the course of assessment proceedings, AO issued ^notice u/s. 133(6) of the Act to-all the persons / entities and in response to that all the persons / entities has submitted the details as to for which purpose godowns are used. From that information, AO gathered that Godown No.; 5 which is used by Banaskantha Dist. Co-op. Milk Producers Union Ltd., Palanpur( Hereinafter referred as Banas Dairy) is using the godowns for the purpose of storage of skimmed milk and skimmed milk is not agriculture products. The appellant during appellate proceedings also submitted that skimmed milk is prepared from drying of milk to extends its longeti .....

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..... e conditions should be granted, After carefully understanding the ratio laid down in the case laws (Supra) i agree with, the contention that deduction u/s.34AD should be allowed for all other godowns which are used for specified business. Accordingly deduction for godowns no. 1,2,3,4 6 is allowable. Accordingly, AO is directed to allow deduction in respect godowns no. 1,2,3,4 6. With respect to godown no.5, appellant submitted rental income earned less depreciation of specified assets as mentioned in section 35AD(7B) should be granted. It is operational part of computation which can be handled as per law. The ground no.2 3 are partly allowed accordingly. 5. The Department is in appeal before us against the aforesaid relie .....

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..... (10) proportionately out of the profit in respect of wings A to F , whereas assessee had claimed deduction for the entire project. The Department approached the High Court on the legal question whether the Tribunal justified in holding that assessee could proportionately allowed the deduction u/s. 80IB(10) out of profits in respect of wings A to F appreciating that assessee had claimed deduction for entire project i.e. apart from wing A to F the assessee had also claimed the deduction with respect other wings as well. The High Court dismissed the appeal of the department and held that Tribunal was right in allowing proportionate deduction u/s. 10IB(10) to the assessee. The SLP filed by the Department against the order of High Court w .....

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