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2023 (10) TMI 917 - AT - Income TaxDisallowance of interest paid on borrowed capital - interest paid on money borrowed which was capitalized under "inventory' in books and claimed through Computation - Interest paid on money borrowed was claimed through computation of income as period cost, being revenue in nature and as per provisions of Section 36(1)(iii) read with Section 43-B - HELD THAT:- As Interest on money borrowed was paid to Banks and Financial Institutions, interest paid is allowable as deduction as per provisions of Section 36(1)(iii) read with provisions of Section 43-B of Income Tax Act, 1961 in the year in which payment is made irrespective of its treatment in books of accounts. The assessee has filed working to show that it has not claimed double benefit in any of earlier years or during the year under consideration in AY 2016-17 and in any of later years as in none of the years, total deduction claimed in respect of interest paid under various heads exceeds total interest paid in those relevant years. To disallow the interest paid under proviso to Section 36(1)(iii) it is necessary to show that the borrowed capital was utilized for the purposes acquiring new assets or for the extension of existing business or profession. The assessing officer has not made any case here that the borrowed capital was utilized for the purposes of new unit, land or capital asset and proviso to Section 36(1)(iii) is applicable. Similar claim of the assessee was allowed in respect of AY 2011-12, AY 2012-13, AY 2013-14, AY 2014-15, AY 201718 and in AY 2020-21. No evidences has been brought on record to justify the change in stand in this particular year. There is no finding given in the assessment order for upholding different view taken by the AO in the Assessment Order for AY 2016-17 as compared to view taken by him in AY 2014-15. Assessee appeal allowed.
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