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2019 (5) TMI 114 - HC - Income TaxDisallowing the interest u/s 36(1)(iii) - borrowings to set up a new unit for manufacturing door-frames at Haryana - revenue expenses vs capital expenses - whether the new unit set up by the Appellant at Haryana for manufacture of door frames is not an expansion of existing business? - HELD THAT:- Since the authorities below have consistently found against the Assessee that the interest on borrowings to the extent of 2.72 crores which had been capitalised by the Assessee itself in the Books of Accounts for setting up the Haryana Unit, there was no question of allowing the same as deductable expenditure for the Assessment year in question, as the said unit was yet to commence production. Even though the Assessee is one company and it has set up a different unit at Haryana and since the interest paid on borrowings pertains to Haryana Unit, which was a new unit set up by the same company,it cannot be construed as a mere expansion of business existing at Chennai particularly, when the Assessee has capitalised the said expansion in its Books of Accounts as consistently found by the authorities below. Therefore, the disallowance of said interest on borrowings under Section 36(1) (iii) of the Act was a natural consequence to follow. Disallowance u/s 14A - HELD THAT:- No Substantial Question of law arises for consideration, as the said issue has only been remitted back to the AO by Tribunal for ascertaining actual expenses incurred by the Assessee in earning the exempted income for the Assessment Year in question. Whether the Assessee incurred anything or not is the question of fact and the same has to be ascertained by the Assessing authority the same does not give rise to any Substantial Questions of law.
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