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Appellate Tribunal in Kolkata grants deduction under Section 35AD The Appellate Tribunal in Kolkata allowed both appeals of the assessee on 5th July 2023. The Tribunal held that the assessee was eligible for deduction ...
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Provisions expressly mentioned in the judgment/order text.
Appellate Tribunal in Kolkata grants deduction under Section 35AD
The Appellate Tribunal in Kolkata allowed both appeals of the assessee on 5th July 2023. The Tribunal held that the assessee was eligible for deduction under section 35AD of the Income Tax Act without any condition regarding the commencement of the business, remanding the case back to the Assessing Officer for further proceedings. The disallowance made by the lower authorities was deleted based on the Tribunal's interpretation of the provisions of Section 35AD, following a decision by the Coordinate Bench and the Chandigarh Bench.
Issues Involved: The judgment involves the disallowance of capital expenditure under section 35AD of the Income Tax Act.
ITA No. 237/Kol/2023: The sole issue raised by the assessee in this appeal pertains to the disallowance of Rs. 7,73,14,356/- u/s 35AD being capital expenditure incurred for the purpose of specified business.
The assessee company filed its return of income for the assessment year 2014-15, declaring a total loss. The assessment order passed later was revised under section 263 of the Act due to an erroneous claim of deduction under section 35AD. The Principal Commissioner of Income Tax set aside the issue, directing a fresh assessment order. The Assessing Officer observed that the expenditure was not incurred prior to the commencement of the business and hence disallowed the deduction under section 35AD.
The counsel for the assessee cited a decision by the Coordinate Bench of the Tribunal in a similar case, where the deduction was allowed in favor of the assessee. The Tribunal found that the lower authorities wrongly interpreted the provisions of Section 35AD. It was clarified that the assessee is eligible for deduction if the expenditure is incurred wholly and exclusively for the specified business, without any condition regarding the commencement of the business. The Tribunal allowed the deduction in favor of the assessee, remanding the case back to the Assessing Officer for further proceedings.
The Tribunal agreed with the decision of the Chandigarh Bench and ordered the disallowance made by the lower authorities to be deleted. Since the facts and issues in both appeals were identical, the findings for ITA No. 237/Kol/2023 were applied to ITA No.238/Kol/2023.
In conclusion, both appeals of the assessee were allowed by the Appellate Tribunal in Kolkata on 5th July 2023.
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