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2017 (12) TMI 1668 - AT - Income TaxInterest expenditure - AO disallowed the same because the interest income on term deposits as claimed by the assessee, in the opinion of the AO, was not allowable due - HELD THAT:- We set aside the order of the CIT(A) and direct the AO to allow deduction in respect of said interest accrued and calculated at 12% per annum amounting to ₹ 2,64,72,208/- after disallowing proportionate interest in respect of the investment in shares amounting to ₹ 3,51,176/- after verifying the calculation of the interest quantification. Now coming to the additional ground raised with respect to capitalization of interest we are of the view that to the extent the interest relate to the investment, i.e. being disallowable under Section 57 will become part of cost of acquisition of shares and therefore the AO is directed to take it as part of the cost of shares for determining profit on sale of the shares. Thus, the additional ground stands allowed to that extent. Addition on account of personal household expenses - HELD THAT:- We find that the addition made by the AO as well as sustained by the CIT(A) are though on ad-hoc basis, but same was done because no details of expenditures was filed by the appellant. Before us, the Ld. Counsel has submitted that, most of the expenses have been incurred by Dr. Hitesh S. Mehta and other family members living in a Joint family set-up. Further other members have contributed for household expenses and that some of the additions have been confirmed on account of personal household expenses by the Department. On these facts and circumstances, we are inclined to scale down the additions to ₹ 3 lakhs. Accordingly, addition sustained on account of personal household expenses would be ₹ 3 lakhs. Levy of interest under Section 234A, 234B and 234C as well as calculation of the said interest - HELD THAT:- Respectfully following the said order of the Tribunal in the case of Eminent Holding P. Ltd.[2014 (7) TMI 466 - ITAT MUMBAI] we direct the AO to recomputed the interest liability after reducing the amount of tax deductible at source on the income earned. Allow the deduction of interest expenditure as claimed by the assessee out of the interest on term deposit after verification of the calculation of interest quantification. We further direct the AO to allow capitalisation of interest which has been proportionately disallowed in view of the additional ground.
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