TaxTMI 
TaxTMI 
TaxTMI 
2017 (8) TMI 1368
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....order of CIT(A) confirming the action of the AO in dealing with expenses relatable to exempt income by invoking the provisions of section 14A of the Act read with Rule 8D of the Income Tax Rules 1962 hereinafter the Rules. 3. Briefly, stated facts are that the AO during the course of assessment proceedings noticed that the assessee has earned dividend income of Rs. 51,60,998/- and claim the same as exempt under section 10(34) of the Act. The AO also noticed that the assessee has worked out disallowance under section 14A of the Act at Rs. 3,57,258/- in the return of income. The assessee has also paid interest on borrowed funds for a total out the interest as per Rule 8D of the Rules and he submitted the working of interest as per Rule 8D(2)....
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.... surplus which is more than the investment in shares and growth of funds from where the assessee has earned this dividend income. We find that this issue is covered by the decision of the Hon'ble Bombay High Court in the case of HDFC Bank Ltd. (Supra) and hence, this issue is decided in favour of assessee. 5. As regards, the disallowance of 0.5% of the average value of investment, the learned Counsel for the assessee drew our attention to schedule of investment i.e. investment in growth funds as well as equity. According to him, the investment in growth funds should be excluded for computation of disallowance and he relied on the decision of Everest Kanto Cylinder Ltd. vs ACIT (2015) 167 TTJ (Mumbai) 204, wherein the issue is set aside to ....
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....ceipt not liable to tax. 3. That the claim of depreciation having been correctly made on the actual cost of the asset as defined in section 43(1) of the Act, the reduction of Rs. 16,40,480/- made therefrom on account of such wrong holding, is unwarranted and unjustified and so is the confirmation thereof by the learned Commissioner of Income-tax (Appeals)." 8. Briefly stated facts are that the AO, in view of the assessee letter dated 17-11-2011, disallowed the loss to the extent of Rs. 20,50,600/- terming the same as capital receipt being the same received on account of liquidated damages on late delivery of capital equipments i.e. Wind Energy Generators and Accessories. The AO was of the view that the assessee is not eligible for the cla....
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....nd the depreciation is correctly restricted to the effective cost i.e. total cost as reduced by the liquidated damages. In response to the remand report, the appellant contended that the liquidated damages cannot be reduced from the total cost for the purpose of depreciation claim and the appellant is entitled for full depreciation. After carefully taking into account the submissions of both the parties, it is concluded that the view of the Assessing Officer is correct and the effective cost for the appellant is only the finally settled price on the purchase of machinery. Since the liquidated damages were paid by the supplier as against the delay in the machinery delivered, the effective cost of machinery is the final price which is the tot....
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....dingly, we are of the view that the lower authorities erred in making addition amounting to Rs. 16,40,480/- on wrong premises. We delete the addition and allow this appeal of the assessee on this issue. 10. The next appeal of the assessee is against the order of CIT(A) confirming the disallowance of claim of deduction under section 80IA of the Act. For this assessee has raised following ground No. 4: - "4. That the learned Commissioner of Income Tax (Appeals) has erred in confirming the actin of the Assessing Officer in taking the year of installation of windmill as the initial assessment year for computing profit and gains of the eligible business for the purpose of calculating deduction under section 80IA (I) instead of taking the....