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2019 (7) TMI 929 - AT - Income TaxDisallowance finance cost - borrowings were raised through debentures issued - expenditure of ₹ 104.50 crores was incurred for redemption of debenture - eligible business expenditure u/s 36(1)(iii) - objection that quantum of borrowing made together with the period of borrowings such rates of interest are highly excessive - HELD THAT:- Once borrowing has been made through the debentures and utilized for the purpose of business, it has been established through documentary evidence in the shape of agreements and correspondences for which, no contrary evidence has been placed on record, then surmises, conjectures and suspicion should not be made a basis to reject the claim of the appellant company. Thus, the judgment as relied upon has no application to the facts of the instant case. In view of the foregoing, we conclude that the appellant is entitled to deduction of ₹ 104.50 crores incurred on redemption of debentures u/s 36(1)(iii). Furthermore, we also hold that ₹ 1 crores earned by the appellant on redemption of debentures by M/s. Vatika Ltd. in respect of investment made by the appellant company was taxable as business income as declared in the return of income. As a result, grounds raised by the appellant are allowed. Addition in respect of sale of commercial area - collaboration agreement was also entered between the appellant and M/s. DLF Ltd. to develop the land - agreement for proportionate expenditure on account of advertisement and marketing - out of proportionate sale proceeds was ₹ 103.42 crores. M/s. DLF deducted ₹ 13.92 crores and credited ₹ 89.50 crores to appellant - HELD THAT:- The aforesaid agreements supported by independent confirmation obtained u/s 133(6) by the learned Officer in the remand proceedings, to which, no contrary evidence has been placed on record, we are of the opinion sum taxable is ₹ 89.50 crores and not at ₹ 103.42 crores as taxed in the impugned orders. In our considered opinion, income accrued is only ₹ 89.50 crores which is also supported by an audited certified statement and thus, addition so made is not in accordance with law and therefore, is deleted. Grounds raised by the appellant are allowed. Addition under the head ‘income from house property’ - property left left vacant and not forming part of block of assets - HELD THAT:- In the present case, we are concerned with the property which is purchased for the purpose of resale and lying vacant under head ‘inventory’ and meanwhile used for purpose of business. The FMV of the property used by appellant for business purpose admittedly cannot be determined u/s 23(1). In identical case coordinate bench of Delhi Tribunal in case of Ashok Kumar Gupta vs. ITO [2017 (10) TMI 1077 - ITAT DELHI] has held that FMV of properties used by appellant for business purpose could not be determined u/s 23(1). In the said case, properties under consideration were the properties which which are lying vacant or were under construction or were let out or were self occupied for the purpose of business purpose and in respect of properties which were used by the assessee for his own office/ business purpose it was held that FMV of the properties used by the assessee for business purpose admittedly cannot be determined u/s 23(1) We are of the opinion that addition made by erroneously determining annual value u/s 23(1) is not in accordance with law and is therefore deleted.
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