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2019 (6) TMI 742 - ITAT DELHIDisallowance u/s 36(1)(iii) - assessee has claimed interest expenditure on account of interest paid to bank on loan taken from Citi Bank, which was utilized for booking of several office spaces shown in his investment details - HELD THAT:- When we examine the proviso to section 36(1)(iii), its opening lines are “any amount of interest paid in respect of capital borrowed for acquisition of asset shall not be allowed as deduction”. In this case, first of all, assessee has failed to explain the purpose for availing the loan from the Citi Bank. Secondly, though the assessee has booked various spaces for office use but he has never taken possession thereof and as such proviso to section 36(1)(iii) is attracted. Moreover, when it is undisputed fact that the assessee has invested borrowed money along with his own funds in various office properties in order to extend its business but the same was never put to use during the year under assessment, no deduction is allowable. Assessee that section 36(1)(iii) does not speak about immovable properties rather speaks of assets only is also not sustainable because assessee cannot be allowed to blow hot and cold in the same breath as the assessee has tried to prove on record that he has invested the borrowed money for extension of the office i.e. office space which are certainly an immovable property/asset but the same has never been put to use for business purpose. In these circumstances, assessee are not applicable to the facts and circumstances of the case. Interest bearing and interest free funds available at the disposal of the assessee which are far more than amount of loan availed of is concerned, we are of the considered view that the CIT (A) has validly and legally dealt with by extending the part relief to the assessee by way of disallowance of interest on pro-rata basis and has reached the conclusion that the remaining amount is required to be disallowed under the proviso to section 36(1)(iii) - Decided against assessee.
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