TaxTMI 
TaxTMI 
2023 (4) TMI 616
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.... assessee claimed that it has taken loan of Rs. 27.46 crores from M/s Adarsh Credit Co-operative Society Ltd and the above said interest was paid on the loans so taken. However, the AO took the view that the society has not given any loan to the assessee. He also took the view that M/s Adarsh Credit Co-operative Society Ltd has transferred share application money to the assessee. Accordingly, he disallowed the interest claim of Rs. 3.00 crores made in A.Y 2013-14. The assessee had claimed interest expenditure of Rs.11.94 crores against the loan taken from M/s Adarsh Credit Co-operative Society Ltd in AY 2014-15. The AO disallowed interest expenditure of Rs. 11.94 crores on the very same reasoning that the assessee has not taken any loan from M/s Adarsh Credit Co-operative Society Ltd. 4. The ld. CIT(A) confirmed the addition made in both the years. 5. The ld. AR submitted that the assessee has availed loan from M/s Adarsh Credit Co-operative Society Ltd and it is included the balance-sheet under the head "Loan from banks". The ld. AR also invited our attention to the loan account copy placed in the paper book. He submitted that M/s Adarsh Credit Co-operative Society Ltd has actua....
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....fy himself that the assessee has actually availed loan from said aforesaid society. Accordingly, we set aside the order passed by the ld. CIT(A) on this issue in both the years under consideration and restore the same to the file of the Assessing Officer in both the years for examining it afresh in the light of discussions made (supra). We also direct the assessee to produce the books of accounts and also furnish any other information and explanations that may be called for by the Assessing Officer in this regard. Since the interest expenditure has been disallowed in both the years only on the reasoning that the assessee has not availed loan from the above said society and if the AO is satisfied that the assessee has taken loan, then the question of disallowing interest expenditure will not arise. 9. In A.Y 2014-15, the assessee has raised one more issue relating disallowance of depreciation claim of Rs. 52.48 lakhs. AO noticed that the assessee has not carried out any business activity during the year relevant A.Y 2014-15. When questioned, the assessee submitted that it has stopped business activity since the production of electricity has become unviable, i.e., the selling price ....
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.... the order passed by the ld. CIT(A) on this issue does not call for any interference. 12. In the rejoinder, the ld. AR submitted that the assessee has only stopped generation of electricity, but did not stop other business activities. Hence it cannot be said that the assessee has completely shut its business. He submitted that the assessee is having investments and also generating income like interest, dividend and other miscellaneous income. He submitted that the assessee is also taking steps to repay the loan taken from bank. Accordingly, ld. AR submitted that the case laws relied by the ld. CIT(A) is distinguishable. 13. We heard rival contentions and perused the record. Four significant contentions have been raised before us by Ld A.R. First, it was submitted that the assessee has not completely stopped the business as presumed by the tax authorities. If that is the case, there was no necessity for the assessee to maintain establishment and incur expenses including interest expenses. Secondly, it was submitted that the assessee has been generating other types of income. Thirdly, it was submitted that the assessee may revive its business when the market position turns favourab....
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.... the assessee. It is also settled that where there are two possible interpretations of a taxing provision, the one which is favourable to the assessee should be preferred. Two requirements to claim depreciation under Section 32 of the Act are : (i) the asset should be owned by the assessee, and (ii) it should be used for the purposes of business or profession. The Supreme Court has preferred to give a wide meaning to the term "owned" following its earlier judgment given in the case of CIT v. Podar Cement (P.) Ltd. [1997] 226 ITR 625, in which it has been held that anyone in possession of the property in his own title exercising such dominion over the property as would enable others being excluded therefrom and having the right to use and occupy the property and/or to enjoy its usufructs in his own right would be the "owner" of the building though the formal deed of title may not have been executed or registered as contemplated by the Transfer of Property Act and the Registration Act, etc. 5. In Machinery Manufacturers Corporation Ltd. v. CIT [1957] 31 ITR 203 the Bombay High Court has observed that the expression "used" in Section 10(2)(vi) of the Indian Income-tax Act, 1922, co....