TaxTMI 
TaxTMI 
2015 (1) TMI 152
X X X X Extracts X X X X
X X X X Extracts X X X X
.... its return of income for A.Y. 2006-07 on 16-10-2006 declaring total income of Rs. 18,49,330/-. The case was selected for scrutiny and thereafter the assessment was framed u/s. 143(3) vide order dated 28-03-2008 and the total income was determined at Rs. 22,67,789/-. Aggrieved by the order of AO, Assessee carried the matter before Ld. CIT(A) who vide order dated 07-07-2010 granted partial relief to the assessee. Aggrieved by the aforesaid order of Ld. CIT(A), Assessee is now in appeal before and has raised following grounds:- "1. Ld. CIT (A) erred in law and on facts in confirming disallowance made by AO u/s 14A of the Act of Rs. 63,455/- being proportionate interest expenses for earning tax free income ignoring the fact that appellant mad....
X X X X Extracts X X X X
X X X X Extracts X X X X
....terest on the basis of interest rate of 9% that was paid by the Assessee and worked out the disallowance at Rs. 63,450/- . Aggrieved by the order of AO, Assessee carried the matter before Ld. CIT(A). Ld. CIT(A) upheld the order of AO by holding as under:- "3. The first ground is regarding disallowance of Rs. 63,455/- u/s. 14A of the I T Act. The AO noticed that the appellant has claimed exempted dividend income of Rs. 95,757/- from investment of Rs. 2,63,25,080/- in DSPML Fund. The contention of the appellant is that the appellant had sufficient own funds and non interest bearing funds to make investment in mutual funds therefore the AO was not justified in making disallowance of interest expenditure u/s. 14A of the I T Act. During the cou....
X X X X Extracts X X X X
X X X X Extracts X X X X
.....86 crores against which the investment was stated to be Rs. 2.63 crores. He therefore submitted that no interest bearing funds have been used for the purpose of making investments pointed out that the interest free funds were far in excess of the investments. He also placed reliance on the decision in the case of CIT vs. Raghuveer Synthetics 354 ITR 222. Ld. DR on the other relied on the order of AO and Ld. CIT(A). 7. We have heard the rival submissions and perused the material on record. We find that the AO has noted that assessee had made investments of Rs. 2.63 cores in DSPMC fund. Before us, Ld. AR has pointed to the balance sheet as at 31st March, 2006 and pointed to the fact that the share capital of the partners as on 31st March, 2....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ut since the car has been used by the firm for 1/3 business, the firm is entitled to depreciation u/s. 32 as held by the Hon'ble Supreme Court in the case of Mysore Cements in 239 ITR 775. In my view the interpretation of decision of Hon'ble Supreme Court by the AR is misplaced. Section 32 of for A.Y. 2006- 07 is reproduced as under:- "32 (I) In respect of depreciation of- (i) building, machinery, plant or furniture, being tangible assets (ii) know how, patents, copyrights, trade marks, licenses, franchises or any other business or commercial rights of similar nature, being intangible assets acquired on or after the 1st day of April, 1998 owned wholly or partly by the assessee and used for the purposes of the business or profession, the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....is considered to be correct law then on all the cars taken on lease by any assessee, depreciation can be claimed by such assessee because such cars are being used by him for the purpose of his business. It is therefore necessary for the appellant to be the owner of the car wholly or partly. As in this case the firm is neither the de jure owner nor de facto owner, depreciation u/s. 32 cannot be allowed to the appellant firm. In fact in all the decisions relied by the Authorised Representative the ownership vested with the assessee as the funds were employed by the assessee for the purpose of claim of depreciation u/s. 32 of the IT Act. Action of the AO in denying the depreciation is therefore confirmed." 9. Aggrieved by the order of Ld. CIT....