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2012 (5) TMI 110 - ITAT DELHIDisallowance interest expenses holding that the assessee has not commenced its business – Held that:- As per provision of section 36(1)(iii) interest paid, in respect of capital borrowed for acquisition of an asset for extension of existing business or profession; for any period beginning from the date on which the capital was borrowed for acquisition of the asset till the date on which such asset was first put to use, shall not be allowed as deduction. By implication this proviso is also applicable when assets are acquired for new business – against assessee. Disallowance administrative and other expense by holding that the assessee has not commenced its business – Held that:- Merely taking land on lease, by any stretch of imagination cannot be treated as the commencement / setting up of it's hotel business – against assessee. Right to transfer or sell the plot or the building constructed thereupon (as trading commodity) – assessee contested that land has been shown as stock-in-trade - Held that:- Perusal of clause 5 of the Memorandum of Association of assessee running of hotel is one of the its main objects and not its other object - the assessee can use the hotel plot leased to it only for construction and running of hotel, with no right to transfer the same - although the assessee company has shown it as a stock in its balance sheet and profit and loss account it will not alter the legal position because the substance of a transaction is important and not its entry in the books of account or its treatment by the assessee company - against assessee. Disallowed expenditure to be allowed to be capitalized - in favour of assessee.
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