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2022 (5) TMI 599 - AT - Income TaxDeduction u/s 36(1)(iii) - treatment given to the interest paid by the assessee on its loans, while the assessee takes it to the work in progress, but then in the computation of income, the same is claimed as a deduction under section 36(1)(iii) - double deduction for deduction of interest as also deduction of WIP at the pint of booking revenue - HELD THAT:- The coordinate benches have consistently held that in view of the specific provisions under section 36(1)(iii), interest is to be allowed as a deduction irrespective of its capitalization as WIP, but while charging the WIP, corresponding reduction is to be allowed for the interest already claimed as deduction. In any event, the very foundation of disallowance is special bench decision in the case of Wall Street Construction [2005 (9) TMI 228 - ITAT BOMBAY-F] which stands reversed in the case of CIT Vs Lokhandwala Construction Industries Limited [2003 (1) TMI 93 - BOMBAY HIGH COURT] which holds good even today. The proviso to Section 36(1)(iii) does not come into play in the present case as the residential units are part of the stock in trade, and not the capital assets. Respectfully following the views so expressed by the coordinate benches, we approve the detailed and well-reasoned approach adopted by the CIT(A) and decline to interfere, in principle, in the matter. As regards the learned Departmental Representative’s apprehension of double deduction, however, we consider it fit and proper to add that once these amounts are allowed as deduction in the year of incurring the expenditure, the same shall not be eligible for being allowed as deduction yet again as a part of the work in progress being debited to the profit and loss account in any subsequent year. The double deduction will thus not be permissible. The conclusions arrived at by the learned CIT(A), subject to this observation, are approved. Learned representatives fairly agree that whatever we decide for the assessment year 2013-14 will equally apply to the other two assessment years 2014-15 and 2015-16 as well. The conclusions arrived at by the learned CIT(A) for the other two years must also be approved, subject to the observations above, as well. Appeal dismissed.
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