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2021 (11) TMI 313 - AT - Income TaxDisallowance of deduction claimed u/s. 24(b) - interest incurred on outstanding purchase consideration to acquire the properties of real estate division of M/s. Ballarpur Industries Ltd. on its demerger - HELD THAT:- We find that the ld. CIT(A) has not solely adjudicated based on the earlier assessments but has also so considered the various judgments of Hon'ble High Court of Calcutta in the case of CIT Vs. R.P Goenka [1998 (3) TMI 106 - CALCUTTA HIGH COURT] and the judgment of Sunil Kumar Sharma [2002 (2) TMI 91 - PUNJAB AND HARYANA HIGH COURT] wherein it was held that unpaid price is to be treated as borrowed capital within the meaning of Section 24(b). Hence, on independent examination of the facts and the provisions of law, we hold that the interest paid by the assessee to BIL is an allowable deduction as it amounts to interest on the capital borrowed. Disallowance u/s. 14A - AR argued that the disallowance cannot be more than the exempt income earned - HELD THAT:- Since, the proposition of law is clear by now that the disallowance cannot exceed the exempt income, the contention of the ld. AR is allowed. Disallowance of expenses u/s.14A for computing the book profit u/s. 115JB - In accordance with the clause (f) of Explanation to Section 115JB, the disallowance under Section 14A of the Act is a notional disallowance and therefore, by taking recourse to Section 14A of the Act, the amount cannot be added back to book profit under clause (f) of Section 115JB of the Act. The AO is directed to re-compute the profits following the two directions given above.
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