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2013 (5) TMI 863 - AT - Income TaxDisallowance of O/D interest - net off this interest expenditure - Held that:- The basic purpose of making FDR was to show net worth of the assessee in the form of liquid assets for the purpose of allotment of plot. In fact there was initial arrangement between the assessee and the sister concern to share the gains if the plot was allotted. It is also disputed that ultimately no plot was allotted to the assessee, therefore it cannot be said that interest expenditure has been used for the purpose of acquisition of capital assets. In any case, we find that assessee has also received interest amounting to ₹ 15,39,228 out of FDR which has been returned by the assessee as its income. Therefore, the interest expenditure on obtaining OD against such FDR is clearly required to be netted off. Accordingly, we set aside the order of learned CIT(A) and direct the AO to net off this interest expenditure amounting to ₹ 13,63,428 against the interest income of ₹ 15,39,228. Deemed dividend addition under s. 2(22)(e) - Held that:- As observed that the arrangement by the assessee company with M/s Shalimar Estate (P) Ltd. was to share a plot which was being applied or to purchase another piece of land and money was given by M/s Shalimar Estates (P) Ltd. for definite l/3rd share of such plot or for purchase of another land, cannot be simply called a loan or advance, therefore, such payment would not be hit by s. 2(22)(e) of the Act. In these circumstances, we set aside the order of learned CIT(A) and delete the addition of deemed dividend.
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