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Income Tax Appellate Tribunal, “C” BENCH : BANGALORE
Before: SHRI GEORGE GEORGE K. & SHRI LAXMI PRASAD SAHU
per the letter dated 01.09.2023. Therefore the assessee is eligible for depreciation as per section 32(1) r.w.s. 43(1) of the Act. We direct the AO to grant depreciation on interest capitalized of Rs.3,28,69,300 as per law and for subsequent years also. Accordingly, we allow ground No.1.3 in the above terms.
Ground Nos. 2.1 to 2.4 raised by the assessee are in regard to disallowance made by the AO u/s. 14A of the Act even when there is no exempt income received by the assessee. We have gone through the financial statements of the assessee at Note No.21, the assessee has not shown any exempt income in the form of dividend or any other exempt income. It is not in dispute that the assessee has paid interest during the year. The ld. AR also relied on the various judgments including the judgment of Hon’ble jurisdictional High Court in the case of Sterling Developers Pvt. Ltd. v. PCIT, 129 taxmann.com 116 where it is held that when there is no exempt income, no disallowance can be made. During the year the assessee has not reported any exempt income from the investments made. There is also amendment made by the Finance Act, 2022 w.e.f. 1.4.2022 is not from retrospective effect as decided by the Hon’ble Delhi High Court in the case of Era Infrastructure (India) Ltd. (supra). We further note that in assessee’s own case for AY 2013-14, the coordinate Bench in dated 19.1.2018 has held similar view in favour of the assessee. Considering the above judgments, we allow grounds No.2.1 to 2.4.
In the result, the appeal of the assessee is partly allowed.
Pronounced in the open court on this 06th day of September, 2023.