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2017 (6) TMI 558 - AT - Income TaxDisallowance of interest on the borrowed fund utilized for the purpose of investment in property - Held that:- AR placed that assessee is engaged in the business of property. However, on perusal of records, we find that Ld. AR failed to substantiate its claim on the basis of documentary evidence that assessee is engaged in the business of property. Therefore, we are not inclined to hold that assessee is engaged in property business and thus the advance in impugned property is representing investment. In earlier year, the Revenue has not disallowed any interest on account of utilization of borrowed fund in the impugned property and there was an investment in the impugned property to the tune of ₹6,06,10,665/- which was enhanced in the year under consideration by ₹1,36,95,000/-. At the same time, we find that investment in the property was enhanced whereas the loan liability of the assessee was reduced from 38.89 crores to 27.98 crores as evident from the audited balance-sheet of the assessee. Therefore, the possibility of making such investment in the impugned property in the current year out of borrowed fund is ruled out. Admittedly, no disallowance was made by the Revenue on account of interest in the immediate preceding year. Loan liability of the assessee has reduced in the year under consideration. Therefore, we hold that no borrowed fund has been utilized in the impugned property. For the aforesaid reasons, we reverse the order of Ld. CIT(A) in this regard and direct the AO to delete the addition. - Decided in favour of assessee.
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