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2020 (4) TMI 482 - AT - Income TaxDisallowance of interest expenses - interest bearing funds were diverted for purchase of a land - Assessee submitted that being the assessee firm’s asset, the same will be utilised for its business and the interest expenses incurred cannot be disallowed - HELD THAT:- For the assessment year 2008-09, an identical issue was considered by the Tribunal in assessee’s own case [2020 (2) TMI 206 - ITAT COCHIN] amounts borrowed have been diverted for purchase of an asset which belongs to the assessee’s firm. Admittedly, the said asset was not put to use even as on date of hearing of this appeal. Therefore, going by the proviso to section 36(1)(iii) interest expenses on capital borrowed for purchase of asset cannot be allowed as deduction - interest expenditure has to be necesssarily capitalised - proviso to section 36(1)(iii) of the Act is applicable during the relevant assessment year, namely 2009-10 and since the asset (land) has not been put to use by the assessee, the interest expenditure for acquiring the same cannot be allowed as a deduction - Decided against assessee.
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