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2020 (9) TMI 237 - ITAT BANGALOREDisallowance of interest expenditure - As per AO interest attributable to bring the inventory to its present location and condition should be included in the cost of inventory - AO computed interest attributable to the inventory by adopting prime lending rate of 12.75% determined by the State Bank of India - CIT(A) deleted the disallowance - HELD THAT:- There is no dispute with regard to the fact that the inventories held by the assessee are current assets and hence the requirement of capitalising the interest does not arise, as per the proviso to section 36(1)(iii) of the Act mandates capitalization of interest only in respect of capital assets purchased out of borrowed funds. We also notice that the method of valuation adopted by the assessee also gets support from Accounting Standard – 2 issued by ICAI. A.R. also submitted that the newly introduced ICDS though applicable in the subsequent year also supports the methodology adopted by the assessee. Decision rendered by the Ld. CIT(A) is in consonance with the decision rendered by the coordinate bench in the case of JSR Constructions [2016 (7) TMI 943 - ITAT BANGALORE] we do not find any infirmity in the decision rendered by Ld. CIT(A) on this issue. - Decided against revenue.
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