2014 (6) TMI 988

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....y the Ld. Commissioner of Income lax (Appeals) is against law and facts on the file in as much as he was not justified to arbitrarily uphold action of the Ld. Assessing Officer in disallowing interest on capital-work-in progress amounting to Rs. 12,805/-. 2. That he was further not justified to uphold the action of the Ld. Assessing Officer in: a) disallowing a sum of Rs. 6,95,000/- towards exchange difference by resort to provisions of section 43A. b) disallowing a sum of Rs. 3,05,735/- out of processing fee against ECB by wrongly treating the same as a capital expenditure. 3. That he further gravely erred in upholding the disallowance of Rs. 50,000/- by resort to provisions of section 14A." 3. The as....

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....e purpose of business has to be capitalized." The Assessing Officer, thus treated a sum of Rs. 6,95,000/- as a capital loss and capitalized the same under the head Plant & Machinery on which depreciation @ 15% was allowable. However, depreciation @ 7.5% was allowed as the asset was put to use for a period less than 180 days and the net addition was made at Rs. 642,875/-. 7. Before the Commissioner of Income Tax (Appeals), the submission of the assessee was that the loans were availed much later than the date of putting to use the respective assets. As per the ld. AR for the assessee, as contended before the Commissioner of Income Tax (Appeals), the provisions of section 43A were not applicable as the exchange difference was not on accoun....

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....from Citi Bank and from GE Capital against various assets during the year. However, the case of the assessee before the Commissioner of Income Tax (Appeals) was that the provisions of sec43A were not applicable as the foreign exchange was not on account of borrowing for the purpose of imported machinery. The assessee has filed a Paper Book which is available on record. However, it is not clear from the documents available on record whether the assessee had utilized the said foreign exchange for the purpose of acquisition of machinery from any country outside India. In case the basic condition of acquisition of asset from outside India is not satisfied then the provisions of section 43A are not attracted. In order to cull out the facts, we d....