TMI Blog2023 (8) TMI 69X X X X Extracts X X X X X X X X Extracts X X X X ..... iture is not established and on this ground CIT(A) sustained the order passed by the AO. Therefore, the net interest expenditure in the case of assessee remained as expenditure but the assessee failed to use entire loan fund in business. CIT(A) correctly affirmed the addition made by the AO in the hands of assessee. We examined all the facts from the findings of the authorities below and viewed that there is no infirmity in the order passed by the ld. CIT(A). Accordingly, grounds taken by the assessee are rejected.Decided against assessee. - I.T.A. No. 264/Kol/2021 - - - Dated:- 2-3-2023 - DR. MANISH BORAD, ACCOUNTANT MEMBER SHRI SONJOY SARMA, JUDICIAL MEMBER For the Assessee : None For the Revenue : Smt. Ranu Biswas, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the year were at market rates as there was an urgent need of funds and there was no security available to provide against borrowing whereas assessee's own funds were blocked in investment in shares. 3.2 That in any case and in any view of the matter, disallowance for 5/14.25 part of interest by holding it excessive is without any basis and purely based on suspicion and misconception and as such the disallowance of interest for being excessive needs to be set aside. 4.1 That the learned CIT(A) failed to appreciate that there is no concept of capitalization of interest to cost of shares and as such interest incurred during the year is a business expenditure allowable against the business income earned during the year. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 19,51,759/- Disallowance u/s 14A (rule 8D) due to investment in shares 1,47,124/- Assessed Total Loss (-) 2,68,700/- 4. Dissatisfied with the above order, assessee preferred an appeal before the ld. CIT(A) where appeal of the assessee was partly allowed. 5. Aggrieved by the above order, assessee preferred an appeal before this Tribunal. 6. At the time of hearing, no one appeared before this Tribunal to represent the case. Although the registry has issued several notices upon the assessee through RPAD. Hence, we have no other alternative but to decide the appeal ex-parte on the merits of the case with the assistance of ld. DR. Whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as shown investment in shares under the head Assets in the balance sheet. The shares in balance sheet have been valued at cost and not at cost or market price whichever is lower . Thus, they are pure investment and not part of inventory. Therefore, interest paid on borrowings made for investment in shares will go towards cost of shares and will the adjusted when the shares are sold and capital gains is computed. Thus 5.25/14.25 part of the interest paid will be disallowed for being excessive interest and the 9/14.25 part of the interest will be capitalized to the cost of shares and will not be allowed as business income during the year. Ground no. 1 and 2 are thus partly allowed. 7. We after going through the order of the aut ..... X X X X Extracts X X X X X X X X Extracts X X X X
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