TaxTMI 
TaxTMI 
2015 (7) TMI 1193
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....laimed thereby bringing to tax profit on sale of machinery 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 machiner....
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....e same block but not against another block. The AO went on to disallow Rs. 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....
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.... in respect of which same percentage of depreciation is prescribed, are to be treated and form part of block 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 ....
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....ions made by the AO stating that it has not obtained any copy right of musical composition. It was explained that the expenditure 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, goodwi....
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.... to Defendant No.2 and 3 the assignment becoming effective only on the encashment of the cheque referred to below. 2. Defendant Nos. 2 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 Bilmori....
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..... CIT(A), we decline to interfere. Ground No. 2 is accordingly dismissed. 17. Ground No. 3 relates to the disallowance made u/s. 14A of the Act read with Rule 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 ....