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2016 (8) TMI 1522 - ITAT JAIPURDisallowance of interest expenditure - assessee has not carried out any business activity and the payment of interest on the loan taken for paying of earlier loan is thus not for the purposes of business - HELD THAT:- AO has accepted that the loans old or new have been taken for the purpose of business. This fact has neither been denied nor contradicted anywhere in the assessment order. Since this is an established fact that the real estate business is always carried out on the basis of loans from various agencies and their utilization is exclusively to expand the business without in any way leading to the fact that any stoppage or a lull period would hamper the construction work. Even if, for argument sake, the findings of the Ld. AO are considered that there was no business due to stay order of the court, thus it cannot be said that the repair works, construction of passage and other allied and facility items did not continue during this period also as the stay order was purely for constructing new units and extension of the existing units. It is proved that business of the assessee was not discontinued rather temporarily stayed under the order of the Hon’ble Court which has been revived now by vacation of stay with effect from settlement reached between parties. The suspension or discontinuation of one of the activities of business out of several such activities does not disentitle the taxpayer from deduction of interest or other expenditure incidental to the business. All the business activities taken together constitutes the business undertaking as one and so long the same remains under the common management with common resource employment and common establishment and control it cannot be said that the business activity is separate and distinct. The appellant continued its business in the relevant assessment year and the business was neither closed nor discontinued nor it had ever ceased to be functional during the previous year relevant to the assessment year under appeal. Thus we direct the AO to delete the disallowance of interest expenditure. Thus the appeal of the assessee is allowed.
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