TaxTMI 
TaxTMI 
TaxTMI 
2016 (1) TMI 216
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....e Ld. CIT(A) failed to appreciate the legal concept and consequences of an agreement which was midway renunciated for on 28-02-2009, that is in the same assessment year and before the assessment year 2009-10 came to close which renunciation of agreement relates back to the date of the execution of the contract meaning thereby the contract so executed was not in existence. In view of this legal position the contract to purchase Wind Mill for Rs. 5.71 crores got abruptly aborted and the expenditure in between incurred was also abortive and was total loss to the assessee when the original asset was not resultantly acquired by the assessee. The loss be allowed to the assessee. 2) On the facts and circumstances of the case and in law and in v....
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....said Mill without any compensation. This leads to only conclusion that there was no any beneficial capital expenditure. The addition confirmed by Ld. CIT(A) on this account is unwarranted and the addition be quashed. 6) On the facts and circumstances of the case and in law the disallowance confirmed by Ld. CIT(A) of Rs. 90 lakhs be deleted. 7) On the facts and circumstances of the case and in law the levy of interest u/s 234A, 234B and 234C is not justified. The levy of interest be quashed. 8) The appellant craves/leave to add, amend or alter any of the above grounds of appeal." 3. The brief facts concerning the issue involved are that the assessee is an individual and is engaged in a civil engineering contract business with vari....
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....nt of Rs. 7,91,624/- to run the aforesaid business of windmill. The income was shown separately on income side and expenditure was shown separately under the head "direct expenses". As a result, the net income of Rs. 2,54,459/- was generated from the business activity of generation and distribution of power, which was offered taxation through Profit & Loss Account and there is no dispute about the same. 3.2 The assessee states to have debited part payment towards acquisition of windmill project to the windmill expenses. The assessee could not abide by the terms of the MOU dated 27th August, 2008, wherein fulfillment of the payment terms were essence of the contract as per clause 10 of the agreement. As the assessee could not fulfill the ob....
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.... to 7 of the Paper Book containing copy of the MOU dated 27th August, 2008 for purchase of the impugned windmill project. He submitted that the project was commissioned on 29th August, 2006 and was a good condition. In order to expand and diversify the business, the assessee entered into a MOU for purchase of aforesaid existing and running windmill project for a consideration of Rs. 5.71 crores and other taxes on ownership basis. As per the stipulation in clause 7 of the MOU, the entire payments were to be made to the seller by 30th September, 2008. He, thereafter, adverted our attention to clause 10 of the MOU whereby payment terms are the essence of the contract. The formal possession of the project was to be given to the assessee by the ....
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.... :- (i) CIT vs. Ramlinga Choodambigal Mills Ltd., (1999) 239 ITR 120 (Mad); (ii) CIT vs. National Steel & General Mills (P) Ltd., (1990) 88 CTR 13 (Del); (iii) CIT vs. Sohanlal Kunwar & Sons, (1987) 164 ITR 129 (Raj); (iv) Daulatram Rawatmall vs. CIT, (1970) 78 ITR 503 (Cal); and, (v) Asia Power Projects (P.) Ltd. vs. DCIT, (2014) 49 taxmann.com 428 (Karnataka). 8. In the light of above, the Ld. Authorized Representative for the assessee urged that the action of the authorities below requires to be set-aside and vacated. 9. The Ld. Departmental Representative for the Revenue, on the other hand, submitted that the order of the CIT(A) is well reasoned after analyzing the factual and legal aspect of the matter and therefore should ....
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.... be revenue expenditure. On the other hand, in the present case, the capital was provided by the assessee to the seller for acquisition of capital asset. The MOU clearly shows that the assessee was venturing on a new business and the amount was put as the capital expenditure to acquire capital asset. It is therefore clear that the loss arose from the investment and not given in the course of business being carried on by the assessee. Thus, it is capital loss and not a loss incidental to the business. Deprivation from benefit as a result of such capital expenditure is of no consequence and cannot impact the character of expenditure. The decisions cited by the assessee are distinguishable on facts. In all the decision relied upon, the advance....