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2013 (11) TMI 671 - AT - Income TaxClaim of interest expenditure - during earlier years interest was capitalized as work in progress towards acquisition of property - later transaction could not materialized, the expenditure set-off as expenses Held that:- Assessee is not in the business of construction of building and therefore, the monies were not borrowed for obtaining development rights in respect of land unlike in the case relied upon by ld. AR in the case of Lokhandwala Construction Inds. Ltd.[ 2003 (1) TMI 93 - BOMBAY High Court]. The assessee borrowed money to acquire capital asset and the interest on borrowed capital was capitalized by the assessee in the relevant assessment years. In view of above, the said interest expenditure is related to assessment years 1997-98 to 1999-2000 and not to the assessment year under consideration, the assessment year in which the assessee is claiming the interest as revenue expenditure. There is no dispute that the assessee is following mercantile system of accounting and therefore the expenditure on account of interest should have been claimed by assessee in the concerned relevant assessment years Decided against the Assessee. Disallowance of interest on account of use of interest bearing funds for non-business purposes - Assessee paid a sum of Rs.7,18,35,000/- to Saraldisha Investments in the Financial Year 1999-2000 as an advance to acquire shares of one of its subsidiary company Atco Healthcare Ltd. It is observed that the assessee could not get shares, the said amount was treated as loan Held that: - Assessment were completed u/s 143(1) of the Act. Further, the assessee could not establish the link that the advance was given by assessee out of its own funds and no borrowed monies were used. Ld. AR also fairly conceded that the assessee could not furnish the requisite details to establish that borrowed monies were used by assessee for its business purposes and only own money was used to give advance to purchase shares of its subsidiary company Decided against the Assessee.
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