1983 (11) TMI 152 - AT - Income Tax

Tribunal rules on deduction claim, allows stamp costs, disallows part of expenditure

The Tribunal upheld the rejection of the deduction claim under section 80-J, ruling that borrowed capital cannot be considered as capital employed. It ... - Issues:1. Computation of deduction under section 80-J2. Claim of higher depreciation on house properties3. Deduction of stamp costs in executing a mortgage deed4. Disallowance of miscellaneous expenditureComputation of deduction under section 80-J:The assessee claimed a deduction under section 80-J, arguing that the capital employed should include borrowed capital. However, the Commissioner (Appeals) rejected this claim based on the Madhya Pradesh High Court's decision that borrowed capital could not be treated as capital employed. The Tribunal upheld this decision, citing relevant case laws and amendments to section 80-J. Consequently, the claim for further deduction was rejected.Claim of higher depreciation on house properties:The assessee purchased properties on hire-purchase but was allowed depreciation only on the instalments paid until the end of the accounting year. The Tribunal disagreed with the department's view, stating that depreciation should be allowed once the legal title of the property vests in the assessee. Referring to a Supreme Court decision, the Tribunal held that the assessee was entitled to depreciation on the total cost of the property, including interest, and directed the ITO to allow depreciation on the full amount.Deduction of stamp costs in executing a mortgage deed:The assessee sought a deduction for stamp costs incurred in executing a mortgage deed related to a capital subsidy received from MPFC. The Commissioner (Appeals) denied the deduction, arguing that claiming both the subsidy and mortgage expenses would result in a double benefit. However, the Tribunal disagreed, likening the capital subsidy to a loan and citing precedents where expenses for obtaining loans were allowed as deductions. The Tribunal held that the assessee was entitled to the deduction for stamp costs.Disallowance of miscellaneous expenditure:A disallowance of Rs. 1000 from miscellaneous expenditure was made, which the Tribunal confirmed after hearing both parties. As a result, the appeal was partly allowed, with the disallowance of Rs. 1000 upheld.In conclusion, the Tribunal addressed various issues related to deduction computation, depreciation claims, mortgage deed expenses, and miscellaneous expenditure disallowance, providing detailed analysis and legal reasoning for each decision rendered.