2019 (8) TMI 564

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....n respect of following issues:- (a) Disallowance made u/s 40(a)(ia) (b) Disallowance towards personal usage of Aircraft. 3. The Revenue is in appeal on the following issues:- (a) Disallowance of interest relating to work in progress (b) Disallowance towards personal usage of Aircraft. (c) Disallowance of prior period expenses. 4. The assessee is engaged in the business of transportation of goods, courier service, passenger travels and wind power generation of electricity. The assessment in the hands of the assessee for the year under consideration was completed by the AO u/s 143(3) of the Act determining the total income at Nil and computing book profit at Rs. 45.31 crores. Not satisfied with the assessment order, the assessee p....

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....the same to the AO for examining the claim of the assessee. Accordingly this issue is restored to the file of the AO. 10. The next issue contested by the assessee relates to disallowance made out of aircraft expenses towards personal use. 11. The ld AR submitted that the AO disallowed Rs. 94.80 lakhs out of aircraft expenses & depreciation towards the personal use of aircraft. However, the AO has not given any break up thereof. The ld CIT(A) granted relief to the extent of 50% of the disallowance and confirmed the balance amount of disallowance. 12. The ld AR submitted that the assessee is in appeal challenging the disallowance confirmed by the ld CIT(A) and the Revenue is in appeal challenging the relief granted by him. 13. The ld AR s....

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....should be allocated to capital work in progress. Before the AO, the assessee contended that the capital work in progress was funded out of internal resources. However, the assessee furnished a working, wherein the interest attributable to work in progress was shown at Rs. 9.97 lakhs. Hence the AO disallowed Rs. 9.97 lakhs out of interest expenditure. 16. The ld CIT(A) took the view that the assessee has used the borrowed funds for other purposes and the AO has not examined the nexus between the borrowed funds and work in progress. Accordingly he took the view that the disallowance is not called for and accordingly deleted the same. 17. The AO had also added the above said disallowance to the Net Profit, while working out book profit u/s ....

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....e capital work in progress, in which case disallowance of interest is not called for. We derive support for this proposition from the decision rendered by Hon'ble Bombay High Court in the case of Reliance Utilities & Power Ltd (313 ITR 340). However, we notice that these factual aspects have not been examined by the AO. Hence, for the limited purpose of examining the factual aspects, we restore this issue to the file of the AO and direct him to delete the addition on being satisfied that the own funds available with the assessee is in excess of amount of capital work in progress. 21. With regard to the addition made by the AO while computing book profit u/s 115JB of the Act, we noticed that the ld CIT(A) has taken support of the decision ....