TaxTMI 
TaxTMI 
2014 (5) TMI 1165
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.... restricting the disallowance on helicopter expenses to 1/7th instead of 1/5th as disallowed by the AO. 4. The L'd CIT(A) erred in restricting the disallowance on account of depreciation on helicopter to 1/7th instead of 1/5th of the depreciation claimed 5. The L'd CIT(A) erred in restricting the disallowance on account of depreciation on helipad building to 1/7th instead of 1/5th of the depreciation claimed. 6. The L'd Commissioner of Income-tax (Appeals) erred in deleting the addition made by the Assessing Officer under the head "Income from House Property" without appreciating that the rent shown by the assessee was far less than the reasonable rent which a similar property in the same area would fetch. 7. The appellant craves leave to add, alter or amend any or all the grounds of appeal. 2. The assessee is an individual, having two proprietary concerns (i) Amit Constructions and (ii) Swapnali Constructions & Avinash Bhosale-Windmill and is also partner in Avinash Construction, Avi Construction and Sahastrajit Properties. As an individual, he is engaged in the business activity undertaking civil contracts, construction and power....
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....ssing Officer observed that the assessee had invested to the tune of Rs. 1,24,24,69,335/- in shares, Rs. 1,76,18,000/- in mutual funds and negative balance of Rs. 12,37,16,314/- in the partnership firm. The Assessing Officer, thus held that had the aforesaid sum of money utilized for investment in the wind mill business, the interest liability would have been decreased accordingly. The Assessing Officer noted that the assessee had cash available with it, which had been invested in partnership firm, shares and mutual funds whose income was not taxable and on the other hand, the assessee had taken interest bearing funds for investment in wind mill. The Assessing Officer noted that there was no difference between funds of assessee or proprietary business as per books of account maintained. The Assessing Officer, hence rejected the claim of assessee that the interest expenditure incurred by wind mill had no bearing on earning of exempt income and hence not been considered for Rule 8D(2)(ii) of I.T. Rules. The Assessing Officer further noticed while computing average value of investment, the assessee in its working of disallowance u/s.14A had considered the negative balance of Rs. 12,37....
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....ited an amount of Rs. 7,56,61,095/- on account of sale of power and has also shown profit of Rs. 4,77,10,734/- in Profit & Loss Account from wind mill business. In this background, he observed that the aforesaid interest could not be held to be in any way to be related to the earning of exempt income either directly or indirectly. Therefore, disallowance made by the Assessing Officer u/s.14A r.w. Rule 8D(2)(ii) of Rs. 77,78,214/- was allowed out of 1,30,30,180/-. This reasoned finding of CIT(A) needs no interference from our side. We uphold the same. 3. The next issue is with regard to disallowance of 1/5th of total expenditure on helicopter instead of 1/7th. In appeal, the CIT(A) following the decision of ITAT in assessee's own case for A.Y. 2005-06, has restricted the disallowance on helicopter expenditure to 1/7th. The relevant portion of the order is reproduced as under: "From the above, it is clear that special bench decision in the case of Gulathi Saree Centre (supra) or the decision in the case of Mayur Kothari (supra) are in the context of the personal cars; whereas the Pune bench decision in the case of M/s. Kirloskar Oil Engines Ltd (supra) relates to th....
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....easoning, we are not inclined to interfere with the finding of CIT(A), who has restricted the disallowance on helicopter expenditure to 1/7th. We uphold the same. 4. The next issue is with regard to estimation of annual value of let out property at Mumbai at 30,00,000/-. The Assessing Officer noted that the assessee has shown rent received from a house property at Walkeshwar, Mumbai at Rs. 80,500/-, after deduction of Rs. 34,500/- for repairs and collection charges from the total rent receipt of Rs. 1,15,000/-. The flat was 1169 sq. ft. in area and it was let out on rent to the associate concern M/s. Avinash Construction. The Assessing Officer observed that the property was purchased on 30.08.1999 and the total purchase price was at Rs. 2,44,70,031/-. Considering the locality of the property, very low rental income was shown from this related concern, and therefore, the annual value of the property was required to be determined u/s.23(1)(a) of the Act. The Assessing Officer cited information regarding rent available on the website www.realestatemumbai.com., according to which rent in Walkeshwarnagar area, Mumbai per month approximately was Rs. 2,50,000/- to Rs. 3,00,000/-.....