TaxTMI 
TaxTMI 
2016 (4) TMI 1115
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....ed and liable to be deleted. (iii) The Ld. CIT(A) has erred in law and facts by confirming addition of Rs. 2,40,490/- on account of site expenses. The addition is bad in law, unjustified and liable to be deleted. (iv) The Ld. CIT(A) has erred in law and facts by confirming addition of Rs. 7,50,000/- on account of depreciation. The addition is bad in law, unjustified and liable to be deleted." Whereas the following grounds has been taken by the Revenue. "(i) On the facts and circumstances whether the Ld. CIT(A) was right in deleting the disallowance of Rs. 1,50,000/- made on account of medical expenses when the assessee had failed to furnish any break up of the expenses as well as the supporting bills/vouchers. (ii) On the facts and circumstances whether the Ld. CIT(A) was right in determining the long term capital gain on land at Rs. 42,48,533/- instead of long term capital gain of Rs,1,00,00,000/- determined by the Assessing Officer when the cost of acquisition of property was taken by the assessee as entirely towards building on which depreciation was claimed in earlier years and therefore, the cost of acquisition of the land was taken as NIL. (iii) On the facts and ci....
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....loans were utilized for business purposes and no investment was made in the shares out of borrowed funds. He further submitted that the assessee had not incurred any expenses for the earning of exempt income and therefore, no disallowance was warranted and in this respect reliance was placed on the following judgments. (i) CIT vs. Hero Cycles Limited 323 ITR 518 (ITAT, Delhi). The learned AR further relied upon the decision of ITAT Delhi in the case of Dy. CIT vs. Jindal Photo Ltd. for the proposition that the burden is on the Assessing Officer to establish nexus of expenses incurred with the earning of exempt income before making any disallowance u/s 14A of the Act. The learned AR also relied upon the decision of ITAT Delhi Benches in the case of DCIT vs. Maharashtra Seamless Ltd., for the proposition that where in the case of mixed funds, it is not possible to ascertain as to whether investment in tax free bonds is from borrowed funds on assessee's own funds no disallowance was warranted. The learned AR further submitted that in Asst. year 2010-11 similar disallowance u/s 14A was made in similar facts and circumstances and learned CIT(A) had deleted the same in this respect filed....
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....e to Rs,30,000/- was not based upon the facts as learned CIT(A) should have allowed the complete relief to the assessee. 12. The learned DR, on the other hand, heavily relied upon the orders of authorities below. 13. Arguing upon the appeal filed by the Revenue, the learned DR submitted that the learned CIT(A) had wrongly allowed the relief to the assessee and he heavily placed his reliance on the assessment order. 14. We have heard the rival parties and have gone through the material placed on record. 15. As regards Ground No.1, regarding disallowance u/s 14A, we find that learned Counsel has tried to justify that disallowance u/s 14A was not warranted in view of the fact that no borrowed funds were utilized for making investments and all Bank loans were utilized for business purposes. However the fact as to whether any exempt income was received during the year under consideration is not coming out from the material on record. One of the members in this appeal is an author in the case of M/s Mayank Auto Engineers (Pvt.) Ltd. in which the Delhi Benches has passed order in ITA No. 1567/Del)2013 on 25.03.2015 and in this case the Tribunal relied upon the decision of Delhi High C....
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....lation to income which does not form part of the total income under the Act. Hence, what Section 14A provides is that if there is any income which does not form part of the income under the Act, the expenditure which is incurred for earning the income is not an allowable deduction. For the year in question, the finding of fact is that the assessee had not earned any tax free income. Hence, in the absence of any tax free income, the corresponding expenditure could not be worked out for disallowance. The view of the CIT(A), which has been affirmed by the Tribunal, hence does not give rise to any substantial question of law. Hence, the deletion of the disallowance of Rs. 2,03Js2/~ made by the Assessing Officer was in order". 15. Income exempt under Section 10 in a particular assessment year, may not have been exempt earlier and can become taxable in future years. Further, whether income earned in a subsequent year would or would not be taxable, may depend upon the nature of transaction entered into in the subsequent assessment year. For example, long term capital gain on sale of shares is presently not taxable where security transaction tax has been paid, but a private sale of share....
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....nd closing stock has already been considered in Asst. Year 2008-09 also needs verification at the end of Assessing Officer who on the basis of records available with him will examine as to whether in Asst. Year 2008-09, the Assessee had been taxed for the difference in opening and closing stock and whether the assessee is in appeal in that year and on the basis of determination final facts and circumstances the Assessing Officer will pass appropriate order. In view of the above Ground No.2 is allowed for statistical purposes. 18. As regards Ground No.3, We find that Assessing Officer had made the addition of Rs. 2,40,490/- being 1/3 of the total expenditure claimed to the tune of Rs. Rs. 8,01,635/-. The Assessing Officer had disallowed 30% of expenses as assessee could not produce some of the bills/ vouchers for site expenses. The learned CIT(A) has further allowed relief to the assessee by confirming the disallowance only up to Rs. 80,163/- representing further 30% of disallowance. We find that the order of leaned CIT(A) is quite reasonable and we do not find any infirmity in the same, therefore, Ground No.3 is dismissed. 19. As regards the addition on account of depreciation, w....