TaxTMI 
TaxTMI 
TaxTMI 
2015 (7) TMI 1193
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....hinery and equipment sold during the year. The assessee is aggrieved by the fact that the concepts of block of assets have not been properly appreciated. 2. The second grievance relates to disallowance of Rs. 2,00,00,000/- claimed to be revenue expenditure incurred in the ordinary course of business and 3. The third grievance relates to the disallowance made u/s. 14A r.w. Rule 8d amounting to Rs. 10,53,960/-. 3. The assessee is a film producer, distributor and exhibitor. The assessee is also having income from property, income from other sources and capital gains. While scrutinizing the return of income, the Assessing Officer noticed that the assessee has sold machinery and has realized positive income of Rs. 30,75,231/-. The AO not....
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..... 33,75,231/-. 5. When the matter was taken before the Ld. CIT(A), the same plea was taken by the assessee but failed to convince the Ld. CIT(A) and the disallowance of Rs. 33,75,231/- was upheld. 6. Before us, the Ld. Counsel for the assessee drew our attention to the definition of block of assets as provided u/s. 2(11) of the Act. It is the say of the Ld. Counsel that all assets fall within the same rate of depreciation and form part of block of assets and therefore any gain on the sale of asset of the block can be set off against the WDV of the assets in the same block. In support of his contention, reliance was placed on the decision of the Hon'ble High Court of Delhi in the case of Ansal Properties and Infrastructure Ltd. 20 Taxman.c....
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....k of assets. The Hon'ble High Court has held as under: "As per section 2(11), the expression 'block of assets'means group of assets falling within the assets enumerated in clauses (a) and (b). Clause (a) refers to tangible assets, including building, machinery plant and clause (b) refers to intangible assets like copyright, know how, trade mark, etc. The aforesaid section does not make any distinction between different units or different type of business, which may be carried on by the assessee. The term 'business' mentioned above refers to different type of business activities carried on by the assessee. The only requirement is that in respect of assets which form the block of assets, same percentage of depreciation should be prescribed.....
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....enditure of Rs. 2 crores was not for the purpose which is an offence under the law. Further the said payment does not represent any penalty nor a punishment for infraction of law nor for any illegal purpose nor for any violation or an offence or which is prohibited by law. The assessee strongly submitted that the payment is simply compensatory in nature paid in terms of the Consent Terms in respect of the claim made by Shri Ram Sampat. Since the film was on the verge of release and any legal dispute would have resulted in exemplary financial losses, running into crores of rupees besides causing damage to the image, goodwill and reputation of the producers, the assessee had no alternative but to pay the compensation of Rs. 2 crores therefore....
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....and 3 have tendered the sum of Rs. 1,77,34600/- (Rupees One Crore Seventy Seven Lakhs Thirty Four Thousand Sex Hundred Only) to Plaintiff (i.e. 2,00,00,000/- (Rupees Two Crores Only) less TDS By Cheque dated 10.04.2008 bearing No.600612 drawn on Oriental Bank of Commerce, Stantacruz Branch, Mumbai the receipt whereof the Plaintiff admits and acknowledges. Defendant Nos.2 and 3 undertake that the said chque shall be honoured on first presentment. The Defendant Nos. 2 & 3 undertake to deliver the TDS Certificate to the Plaintiffs through his Advocates and Solicitors M/s. Jehangir Gulabbhai and Bilmoria and Daruwalla, having their Office at Rajabahadur Mansion, 20, Ambalal Doshi Marg. (Hamam Street), Fort, Mumbai - 400 0213 on or before 21st A....
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.... 8D. 17.1. During the year, the assessee has earned exempt income from Mutual Fund dividend at Rs. 2.40 crores. The assessee was asked to explain why Section 14A read with Rule 8D is not applicable to the assessee's case. The assessee replied that it has not incurred any expenditure for earning the exempt income. The AO did not accept assessee's submission. The AO observed that the investment have increased to Rs. 39.40 crores from Rs. 2.5 crores for the year ending 31.3.2008. The AO proceeded by computing the disallowance as per the formula given in Rule 8D and the disallowance was computed at Rs. 10,53,961/- and after deducting the disallowance already made by the assessee at Rs. 4,81,914/-, the AO added Rs. 5,72,047/-. 18. The assessee....