TaxTMI 
TaxTMI 
TaxTMI 
2023 (10) TMI 371
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....law. 2. For that on the facts and in the circumstances of the case, the disallowance of Rs. 48,36,016/- on account of loss on sale of assets which were not part of block of assets, thereby invoking provisions of section 32 is bad in law as well as on facts." 3. Brief facts of the case are that assessee is engaged in the hospital and trading of pharmaceuticals business. It filed its return on 30.09.2015, reporting a total loss of Rs. 18,08,89,140/-. Assessee had constructed a hospital with more than 100 beds and commenced its operation from AY 2013-14. In this respect, assessee claimed a deduction u/s. 35AD for the capital expenditure incurred for the purpose of specified business i.e. constructing and running business of hospital. In the year under consideration, assessee has claimed a deduction of Rs. 10,33,21,064/- u/s. 35AD while computing its income from profits and gains from business and profession which was disallowed by the Ld. AO by holding that deduction u/s. 35AD of the Act can only be claimed during the year of running of the specified business for which such expenses was crystallised. Ld. AO found that the claim of assessee is not tenable and rejected the same. 3....
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....of any expenditure of capital nature incurred, wholly and exclusively, for the purposes of the specified business carried on during the previous year in which such expenditure is incurred. Capital expenditure incurred prior to the commencement of operations of the specified business and capitalised in the books of account of the assessee on the date of commencement of operations is also eligible for the deduction." 4.2. Thus, according to the Ld. Counsel, as per both, the section and the explanation, there exists no doubt on allowability of the Investment Linked deduction under section 35AD, amounting to Rs 10,33,21,064/- 4.3. Ld. Counsel stated that this issue of disallowance made u/s. 35AD is covered by the decision in assessee's own case for AYs 2014- 15 and 2017-18 of the Coordinate Bench of ITAT, Kolkata in ITA No. 237 and 238/Kol/2023 dated 05.07.2023 wherein claim of the assessee has been allowed by placing reliance on the decision in the case of Haryana Warehousing Corporation Vs. ACIT in ITA No. 1374/Chd/2016 by Coordinate Bench of ITAT, Chandigarh. The observations and findings given by the Coordinate Bench of ITAT, Kolkata in assessee's own case (supra) are extract....
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....he decision of the Coordinate Bench of the Tribunal in the Haryana State Warehousing Corporation vs. ACIT in ITA No. 351/Chd/2019 vide order dated 03.10.2019 (one of us i.e. Judicial Member being part of the Bench in the said case). The relevant part of the order of the Tribunal is reproduced as under: 5. We have considered the submissions of both the parties and perused the material available on the record. In the present case it is noticed that a similar issue having identical fact was a subject matter of the assessee's appeal for the A.Y. 2011-12 to 2014-15 in ITA No. 239/Chd/2016 & others, wherein the issue has been decided in favour of the assessee and the relevant findings have been given in para 10 to 14 which read as under: 10. Now coming to the issue on merits taken by the assessee vide ground Nos. 4 and 5 of the appeal. The brief facts relating to the issue are that the assessee has claimed deduction u/s 35AD of the Act from its profits on account of construction of warehouses in different Districts of Haryana, however, the AO has disallowed the deduction observing that as per the proviso to Section 35AD of the Act, the expenditure incurred wholly and exclusivel....
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....perations of his specified business. 13. In our view, the lower authorities have wrongly interpreted the relevant provisions of the Act. There are two parts of the abovesaid provisions. In the first part, it has been mentioned that an assessee is eligible to claim deduction of the capital expenditure if such an expenditure has been incurred wholly and exclusively in a specified business. There is no condition of any date or year of commencement of specified business. However, in the second part, it has been provided that if such an expenditure has been incurred prior to the commencement of business and has been duly capitalized in the books of account, the claim will be allowed in the year in which the assessee commences operations of his specified business. There is neither any overlapping nor any contradiction in the aforesaid provision. The assessee is covered in the first part i.e. the assessee has incurred the expenditure on the specified business during the year in which operations of his business of warehousing were already going on. In view of this, we do not find any justification on the part of the lower authorities in denying the deduction to the assessee u/s 35AD of ....
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....en accounted as capital work-in-progress and not added to the block of assets for the purpose of charging depreciation. Since assessee found that its setting up of clinic as an expansion is not economically viable and in order to save future losses, it was dropped. Accordingly, the assets relating to this set up were put to sell which resulted into certain losses as tabulated above. Assessee has thus, claimed this as expenditure incurred wholly and exclusively for the purpose of business which remained to be capitalised for the purpose of claiming depreciation u/s. 32 of the Act. These assets were never put to use and no depreciation was claimed on the said assets. 6.2. To buttress the contention, Ld. Counsel placed reliance on the decision of Hon'ble jurisdictional High Court of Calcutta in the case of Binani Cement Ltd. Vs. CIT (2016) 380 ITR 116 (Cal) wherein it was held that "Expenditure made for construction/acquisition of new facility subsequently abandoned at the work-in-progress such was allowable as incurred wholly or exclusively for the purpose of assessee's business." While answering the substantial question of law in favour of the assessee, Hon'ble Court observed as un....