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2018 (4) TMI 694 - ITAT MUMBAIDisallowance of interest payments - Held that:- Interest expenses incurred by the assessee have been added to the Closing Stock of Work in progress. Hence if this claim of expenditure is disallowed, it would result into reduction in the Cost of Work-in-progress. By any stretch of imagination this cannot be considered as income of the assessee as the same has only been carried forward as Cost to the future years and not been claimed as expenditure for this year. Since the amount is not at all debited to the Profit & Loss A/c, the addition of the Interest Paid to the income of assessee firm by the AO is bad in law. No merit in the action of lower authorities for adding the interest paid by assessee which was added in the work in progress during the years under consideration and has not been claimed as expenditure. Appeals of assessee are allowed.
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