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TMI Blog2023 (12) TMI 208X X X X Extracts X X X X X X X X Extracts X X X X ..... een sold by the assessee on 08.10.2009. Hence, the land taken on lease is hold by the assessee for more than 3 years and consequentially eligible for benefit of indexation thereon. Hence, the resultant gain arising on its transfer would be long term capital gain. The building taken by the assessee been held less than three years and deprecation is also claimed by the assessee thereon. Hence, the building taken would be determined based on dimming provision of section 50 of the Act. The facts of assessee incurring expenses towards cost of construction and claiming depreciation thereon is reflected in the financial statement of the assessee itself commencing from 2006-07, 2007-08 and 2008-09. Hence, there is no scope for rejection of claim of cost of construction. Disallowance of business expenses - Addition made as assessee has not carried on any business activity which is also evident from the profit and loss account whether sale or gross receipts shows at Rs. Nil. - HELD THAT:- As decided in Mokul Finance Pvt. Ltd. [ 2007 (7) TMI 351 - ITAT DELHI-I ] unless there is some material on record to show that the assessee has completely abandoned the share dealing business, merel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deciding upon the plea that the written down value of the block of assets in respect of buildings at the beginning of the previous year as provided in section 50 (1) (ii) of the Act has to be considered as the asset under consideration was a depreciable asset, and (c) in not considering and deciding upon the plea for allowing indexing the cost of acquisition of the lease hold rights in the plot of land as provided by section 48 of the Act as the same was not depreciable and was held for more than three years and therefore a long-term capital asset. 2. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in confirming the disallowance of expenses amounting to Rs. 16,08,268/- made by the AO on the ground that no business was carried on as Gross Sales were declared as Nil ignoring the case laws referred by the appellant. 3. We have heard the rival submissions and perused the materials available on record. The assessee company was incorporated on 21.11.2003. The ld AO received an information from ACIT, Circle-27(1), New Delhi vide letter dated 13.12.2012 that assessee has sold property at Plot No. E-441, YK Riko Industrial Area, Chopanki, Tij ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2007-08 Rs. 27,535/- 4. The assessee also submitted that it had made construction of the super structure on the said leasehold of land allotted to it. The details of cost of construction are incurred by the assessee are as under:- Financial Year Amount 2006-07 Rs. 15 lakh 2007-08 Rs. 14,20,814/- 2008-09 Rs. 16,79,530/- 5. The assessee accordingly pleaded that the book value of the land and building as on 01.04.2009 stood of Rs. 75,32,143/- and same was sold at Rs. 75 lakhs and hence, there was no capital gain that assessed to the assessee. The ld AO did not agree to this contention of the assessee and observed that the assessee had not furnished any evidence in support of its claim for cost of the construction on the said property taken on lease. Accordingly, he proceeded to determine the short term capital gain as under:- Sale consideration Rs. 1,14,06,000/- (-) Less cost of acquisition Rs. 3224493 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cepted the decision of the Court/Tribunal on an issue of law and not challenged it in appeal, then a subsequent decision following the earlier decision cannot be challenged. Further, it is not the Revenue's case before us that there are any distinguishing features either in facts or in law in the present appeal from that arising in the case of Atul Puranik (supra). 5. In the above view, the question as framed by the Revenue does not give rise to any substantial question of law. Thus, not entertained. 6. Appeals dismissed. No order as to costs. 8. Hence, we hold that the sale consideration of transfer of lease hold rate should be considered only Rs. 75 lakhs. Further, we find that the industrial plot of land has been allotted to the assessee on 30.03.2005. The assessee has been making super structure incurring cost of construction in FY 2006-07 onwards. The entire property has been sold by the assessee on 08.10.2009. Hence, the land taken on lease is hold by the assessee for more than 3 years and consequentially eligible for benefit of indexation thereon. Hence, the resultant gain arising on its transfer would be long term capital gain. The building taken by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowed by the lower authorities of doubting its genuineness. The only grievance of the lower authorities is that since no business activity was carried out by the assessee during the year, the aforesaid expenditure cannot be said to be incurred for the purpose of business of the assessee. The ld AR rightly placed reliance before us on the decision of the Allahabad High Court I the case of CIT Vs. Rampur Timber and Tannery Co Ltd reported in 129 ITR 58. The question raised before the Hon ble High Court is as under:- Whether, on the facts and in the circumstances of the case, having held that the assessee was not carrying on any business, the Tribunal was legally correct in allowing the entire expenses of Rs. 11,295 in the assessment year 1969-70, and Rs. 10,613 in the assessment year 1970- 71, except in so far as it can be related to the income from property? Para 6 to 10:- 6. The assesses took the matter to the Tribunal. The Tribunal confirmed the finding that in the year in question the assessee was not carrying on any business. It, however, held : On the other hand, we are unable to accept the contention put forward on behalf of the department that, apart from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... legal expenses, travelling expenses, etc., would be expended wholly and exclusively for the purpose of making or earning such income. A sum of Rs. 6,080 was claimed as revenue expense. This amount was paid as interest on a loan taken from the State Govt. The loan was an asset of the company and was retained as such. Payment of interest thereon would be clearly an expense falling within the purview of Clause (iii) of Section 57 of the I.T. Act. 9. Learned counsel for the department relied upon several decisions which interpret Clause (iii) of Section 57 and analogous provisions of the I.T. Act. They are all distinguishable on facts. For instance, in K. Mahesh v. CIT [1968] 70 ITR 240 (Mad), the question was whether the wealth- tax paid by the assessee on the net value of the stock owned by him was not an allowable expenditure. It was held that for an expenditure to come within the ambit of Section 57(iii) of the I.T. Act, 1961, it must be incidental to the making or earning of the income and there must be nexus between the character of the expenditure and the making or earning of income. This test is satisfied in the present case. The Tribunal has on facts found that the expen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ships of Hon'ble Madras High Court were in seisin of a situation where the assessee had obtained an import licence for doing arecanut business but due to adverse conditions in market, he temporarily suspended the arecanut business for the assessment year in question. Nevertheless, he was maintaining the establishment and was waiting for improved market conditions in arecanut. It was thus an admitted position that no activities were carried out so far as this part of the business was concerned. On these facts, their Lordships took note of the position that There is nothing on record to show that he completely abandoned or closed the business forever. On the other hand, his books of account revealed that he was meeting the establishment charges and interest payments as detailed in the accounts in the year of accounts . It was then observed that the question whether the business is being carried on must depend in each case on its own facts and not on any general theory of law. Their Lordships then referred to, with approval, Lord Summer's observation in IRC v. South Behar Railway Co. Ltd. (1925) 12 Tax Cases 657 that business is not confined to being busy; in many businesses ..... X X X X Extracts X X X X X X X X Extracts X X X X
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