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2023 (2) TMI 1071 - ITAT MUMBAIDisallowance towards interest u/s.36(1)(iii) - Funds borrowed for purchase of land and shown as stock-in-trade in the balance sheet - interest expenditure on borrowed funds incurred by the assessee for purchase of land at Pali has to be capitalized as ‘work-in-progress’ (WIP for short) - HELD THAT:- The said capital was borrowed for the purpose of the business of the assessee by way of purchase of land at Pali for its real estate purchase. AR has also relied on the decision of Tetron Commercial Ltd. [2003 (1) TMI 67 - CALCUTTA HIGH COURT] wherein the said proposition was reiterated by the fact that the borrowed capital utilized for the purchase of business of the assessee, whether or not the same is in the nature of capital expenditure or revenue expenditure, the interest payable for the said loan is to be allowed u/s. 36(1)(iii) of the Act. From the above observation and by respectfully following the cited decision, we are of the view that the assessee’s claim of expenditure u/s. 36(1)(iii) of the Act is to be allowed. We do not find any infirmity in the order of the ld. CIT(A) and, therefore, ground no.1 raised by the Revenue is dismissed. Interest paid on borrowings for investments in equity shares and assessed under the head ‘short term capital gain’ - AO made disallowance as expenditure incurred subsequent to the purchase of assets cannot be considered as ‘cost of acquisition’ - CIT(A) held that the assessee can capitalize the impugned interest as part of cost of acquisition u/s. 48 of the Act which is to be allowed as deduction against the STCG on transfer of shares - HELD THAT:- As relying on TRISHUL INVESTMENTS LTD. [2007 (7) TMI 252 - MADRAS HIGH COURT] we are of the considered view that the assessee’s claim of interest on borrowings against STCG is to be allowed. We find no infirmity in the order of the ld. CIT(A) and we hereby dismiss ground no.2 filed by the Revenue.
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