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2023 (5) TMI 353 - AT - Income TaxCapital gain computation - Allowability of expenses incurred wholly and exclusively in connection with transfer of asset - disallow the Brokerage expense and Transfer Charges as incurred by the Assessee exclusively for Sale of the Business Premises which was the Depreciable Asset of the Assessee - HELD THAT:- We observe that assessee has transferred the premises (Gala) situated at Niraj Industrial Estate, Andheri (E). We observe that the assessee has incurred certain expenses on such sale. As per the provisions of section 50(2) the Assessing Officer has to consider only the net consideration for determining the capital profit or loss and not the gross consideration. In the given case AO has proceeded to calculate the capital gain by considering the gross sale consideration, overlooking the related expenses incurred by the assessee. The expenses claimed by the assessee are part of such sale like commission and other dues to the society are connected with the transfer. Therefore, we direct the Assessing Officer to allow the claim of the assessee and consider to determine the capital gain or loss by considering the net sale consideration, accordingly, this grounds of appeal is allowed. Disallowance of excess interest paid - diversion of funds for non-business purposes - assessee has advanced funds to one of its Directors and charged interest only @13.5% whereas paid interest to ENNPL at higher rate - HELD THAT:- As observed from the balance sheet submitted before us that the assessee has borrowed huge funds for the purpose of business and paid the interest @18% and at the same time assessee has lent the huge amount of loan to one of its director Mr. Anup Shyam Karnani. There is no other funds available in the business than the borrowed funds and the same were utilized to pay the loan to one of the its Director. It is immaterial how the loan was treated by the Director - as far as the assessee is concerned, assessee has borrowed funds @18% without there being any other funds i.e. interest free funds in the business, therefore, it clearly shows that assessee has utilized interest bearing funds to lend the money to one of its Director with a considerable difference of interest rate i.e., 4.5%. Therefore, there is diversion of funds for non-business purpose. Therefore, we do not find any reason to interfere with the findings of the Ld.CIT(A) and we do not intend to get into the issue of deemed dividend at this stage since the assessee is in the business of money lending. We observe that the issue of deemed dividend is not raised by the revenue authorities. Accordingly, ground raised by the assessee is dismissed.
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