Appeal partly allowed for stats. Tribunal directs AO to reconsider disallowance under Section 14A, interest under Section 234B.

The appeal was partly allowed for statistical purposes. The Tribunal directed the AO to reconsider the issues of disallowance under Section 14A and levy of interest under Section 234B. The claim for depreciation on leasehold land was dismissed, but the alternative claim for revenue expenditure was allowed.

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Issues Involved:
1. Claim of depreciation on leasehold land.
2. Disallowance under Section 14A read with Rule 8D.
3. Levy of interest under Section 234B.

Issue-wise Detailed Analysis:

1. Claim of Depreciation on Leasehold Land:
The assessee's grievance was that the claim of depreciation on land with leasehold rights was disallowed. Alternatively, the assessee sought to write off the lease cost. The Tribunal had previously dealt with a similar issue in the assessee's own case for earlier assessment years, where it was held that the upfront lease charges were allowable as revenue expenditure, but the claim for depreciation was not accepted.

The Tribunal reiterated that the leasehold right on land is not a depreciable asset. However, the Tribunal accepted the alternative plea to allow the sum as a revenue expenditure based on the decision in the case of V.S. Lad & Sons, where it was held that lease charges for land on which windmills were erected should be treated as revenue expenditure under Section 37(1) of the Act. Consequently, the Tribunal allowed the claim for revenue expenditure while dismissing the claim for depreciation.

2. Disallowance under Section 14A read with Rule 8D:
The assessee contested the disallowance of expenditure under Section 14A read with Rule 8D, arguing that no expenditure was incurred for earning exempt income. The AO, however, computed the disallowance based on the average value of investments.

The Tribunal noted that the assessee had substantial investments and transactions during the relevant year, making it implausible that no expenditure was incurred. The Tribunal emphasized that the AO can conclude that the claim of nil expenditure is incorrect based on the circumstances. The Tribunal found that the AO did not call upon the assessee to prove its claim and thus set aside the orders of the authorities below, remitting the issue back to the AO for fresh consideration after obtaining the assessee's explanation.

3. Levy of Interest under Section 234B:
The assessee argued that interest under Section 234B was charged despite paying more than 90% of the assessed tax. The Tribunal highlighted that Section 234B stipulates that interest cannot be levied if more than 90% of the assessed tax is paid. The Tribunal observed that the lower authorities did not apply their minds to the relevant section before charging interest. Consequently, the Tribunal set aside the issue of levy of interest under Section 234B, remitting it back to the AO for fresh consideration in accordance with the law.

Conclusion:
The appeal was partly allowed for statistical purposes, with the Tribunal directing the AO to reconsider the issues of disallowance under Section 14A and levy of interest under Section 234B. The claim for depreciation on leasehold land was dismissed, but the alternative claim for revenue expenditure was allowed.

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