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2018 (11) TMI 111 - ITAT JAIPURInterest paid on a borrowed capital for acquiring land - expenditure before Commencement of busniss - assessee claimed this as business expenditure and allowable expenses as per provisions of Section 36(1)(iii) - AO disallowed the claim as this was the interest paid by the assessee before commencement of the business and it should be capitalized and the borrowed money was not utilized for business purposes - Held that:- The acts of the assessee shows that he was pursuing the business of real estate during the relevant period. The land was purchased for the purpose of doing the business of real estate by developing the plots etc. Reflecting the land as investment in books does not reflect the true nature of the transaction. In fact the purchase of land, immediately applying for the conversion of land to residential and also getting the site plant approved establishes that the assessee was very much in the business of real estate during the relevant period and he had set up such business. The process of conversion of the land and then getting the approval of the site plan establishes that the assessee has already set up its business during the financial year relevant to assessment year 2012-13. The interest paid on the borrowed capital for acquiring land has been allowed to the assessee as business expenditure. In such a situation, we direct to delete the addition confirmed by the ld. CIT(A). - Decided in favour of assessee.
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