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2013 (3) TMI 459 - AT - Income TaxDisallowance of interest u/s 36(1)(iii) - Proportionate disallowance of interest u/s 36(1)(iii) - Disallowance under section 43B - Accrued interest income - Held that :- assessee in its letter has given full details of loans and advances. - We find the A.O. has not considered the letter giving all the details and simply mentioned in the order that the assessee company failed to submit any explanation in this regard. Further when the assessee company is having own funds of and borrowed funds of the A.O., in our opinion, was not justified in calculating the interest attributable to capital work in progress only out of the borrowed funds especially. Regarding Disallowance U/s 43B - held that:- Interest payable to banks amounts to only Rs. 2,19,15,545/- out of which of Rs. 79,29,330/- has already been disallowed as part of capital work in progress which I have confirmed above. Hence, only a sum of Rs. 1,39,86,215/- (2,19,15,545-79,29,330) is required to be disallowed u/s 43B. The addition made is thus restricted to Rs. 1,39,86,215/- as against that made at Rs. 1,83,00,000 by the A.O. Interest pertaining to the previous year and is payable as interest on balance sale consideration payable for acquiring a capital asset. The assessee has already commenced its commercial production and there is no dispute on this aspect. The amount in question is allowable u/s.37(1) of the Act. The the provisions of Sec.43-B of the Act will not apply to the facts of the present case, since unpaid sale consideration cannot be said to be monies borrowed. Dismiss the appeal by the Revenue. The interest receivable shown against Mangalaya was the outstanding interest of earlier year. As no portion of the impugned sum has accrued during the year, the addition made of is deleted. The ground raised by the Revenue is dismissed. The appeal filed by the Revenue dismissed.
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