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2020 (8) TMI 366 - AT - Income TaxInterest expenditure allowance - whether CIT(A) was justified in holding that interest expenditure should be allowed even in the back ground that assessee had not offered any income from the project? - whether CIT(A) was justified in holding that interest expenditure should be allowed by allowing a fresh plea not raised before AO, thereby, violating Rule 46A? - HELD THAT:- As per the details available out of total interest cost of ₹ 16,39,35,373/-, an amount of ₹ 490,80,176/- was incurred on account of ancillary borrowing cost being amount paid to Karvy as brokerage for arranging the NCDs and expenses like processing charges, Registration and Stamp Duty Charges and other charges and as per the judgment of Hon’ble apex court rendered in the case of India Cement Limited [1965 (12) TMI 22 - SUPREME COURT] it was held that such expenses are revenue expenses incurred for business purposes and allowable irrespective of the purpose of borrowings and on this aspect, we hold that such expenses are allowable by respectfully following this judgment of Hon’ble Apex Court. The remaining amount of interest expenditure on ICDs and NCDs etc., we find that such expenditure is interest on borrowing for acquiring or carrying the inventory and therefore tribunal order rendered in the case of DLF Ltd. 2019 (6) TMI 1288 - ITAT DELHI is relevant. Tribunal considered in that case the provisions of section 36 (1) (iii) and its proviso and held that this proviso is the only restriction if conditions of section 36 (1) (iii) are satisfied and the proviso is applicable only when the borrowing is made in respect of acquisition of a capital asset for the period up to user of the asset and inventory is not a capital asset and therefore, interest on borrowing used for inventory is allowable u/s 36 (1) (iii). Before us, the learned DR of the revenue has argued that the judgments followed by CIT (A) are not applicable but in reply to the argument of the learned AR of the assessee as per which, he placed reliance on this tribunal order rendered in the case of DLF Limited vs. ACIT (Supra), she could not point out any judgment of any Hon’ble High Court or Hon’ble apex court where a contrary view is taken. Hence, we respectfully follow this tribunal order and decline to interfere in the order of CIT (A) on this issue in both years because facts are admittedly similar in both years. Disallowance u/s 14A - this is the argument of assessee that there is no exempt income in these two years and this is the decision of the learned CIT (A) that in the absence of exempt income, section 14A is not triggered - HELD THAT:- We find that the P & L Account for the year ended as on 31.03.2013 is available on page 39 of the paper book and as per the same, other income is ₹ 55,31,681/- and as per Note No. 18 on page 50 of the paper book, this income is on account of interest on fixed deposit and therefore, it is seen that there is no exempt income. There is no dispute that facts are not different in A. Y. 2014 – 15. As per the judgment of Hon’ble Delhi High Court rendered in the case of Chemiinvest Limited 2015 (9) TMI 238 - DELHI HIGH COURT section 14A cannot be invoked in the facts of the present case. Hence, respectfully following this judgment, we decline to interfere in the order of CIT (A) on this issue also in both years. Revenue appeal dismissed.
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