Contact us   Feedback   Subscription   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Extracts
Home List
← Previous Next →

2015 (12) TMI 1224 - ITAT KOLKATA

2015 (12) TMI 1224 - ITAT KOLKATA - TMI - Addition under section 36(1)(iii) - interest paid on loan borrowed during the year under consideration - CIT(A) deleted the addition - Held that:- The proviso to sec.36(1)(iii) specifically deals with two situations first there should be acquisition of an asset and secondly such acquisition is for extension of existing business. In the instant case expenditure have been incurred for some repairs and replacement works which included replacement of floorin .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

Assesses can not be treated as extension of existing business. Contention of Ld D.R that the work carried out by the Assessee was certainly in the nature of extension of business because the value of business and property would be increased and it amounts to capital expenditure having no essence and not tenable under the facts and circumstances as demonstrated and evident. There fore, taking all facts and circumstances into consideration, We are of the opinion that the work undertaken by the app .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

venue arises out of order of ld. Commissioner of Income Tax (Appeals), Central-III, Kolkata in Appeal No.74/CC-XXIII/CIT(A)/C-III/10-11 dated 16.11.2011 qua the assessment year 2008-09, which is against the order of assessment passed under section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as "the Act"). 1. The short issue which is required to be ad judicated in this appeal is that whether the ld. "Whether the Commissioner of Income Tax (Appeals) was justified or .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

otel building and incurred an expense of ₹ 1,85,75,761/-. From the balance-sheet it was shown that the assessee took fresh unsecured loans from M/s. Devanshi Consultants Pvt. Ltd. as on 31.03.2008 to the tune of ₹ 2,50,00,000/- (loan ₹ 1,50,00,000/- and as on 31.03.2008 was amounting to ₹ 4,00,00,000/-). The solitary issue arising from the same relates to the addition of ₹ 17,45,918/- made by the Assessing officer, on account of loans received by the assessee treati .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

r section 143(3), an appeal was preferred by the assessee before the ld. CIT(Appeals) disputing the addition of ₹ 17,45,918/- made by the Assessing officer. After considering the submissions made by the assessee as well as the material available on record, the ld. CIT (Appeals) summarized his findings on the issue as under:- "6. I have care fully considered the submission of the appellant and have also perused the assessment order on this issue. The appellant is in the business of run .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

was no significant increase in the value of any other assets or reduction in value of any liability. He, therefore, concluded that the entire capital work in progress was carried out by utilising the fresh loan accepted during the year. The total interest incurred on such loan amounted to ₹ 19,70,630/-. He further observed that except the interest amounting to ₹ 2,24,712/- payable to M/s. Devansh Consultants Pvt. Ltd. The balance interest of ₹ 17,45,918/- was paid/payable on fr .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

amount to have any other property to extend the circle of their business. In view of this the proviso to sec.36(1)(iii) are not applicable in their case. 7. However, in the assessment order the A.O. has given different version of the appellant's reply which is reproduced as under :- "It only submitted that no new asset was acquired during the year and that there was only an extension of the existing business. So proviso to sec.36(1)(iii) is not applicable". It is clear from the ap .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

iness or profession (whether capitalised in the Books of A/cs or not). So the determining factor for application of this proviso is - (1) There should be acquisition of an asset and (2) Such acquisition is for extension of existing business. In the instant case expenditure have been incurred for some repair and replacement work which included replacement of flooring and a lift and such replacements are for the smooth conduct of It he existing business and not for the extension of the existing bu .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

fore , proviso to sec.36(1)(iii) is not applicable in this case and the addition is not justified. The A.O. is directed to delete the addition of ₹ 17,45,918/-". 4. On the basis of the above findings as well as for the other reasons given in his impugned order, the ld. CIT(Appeals) deleted the addition made by the Assessing officer observing that the Assessing officer has not disputed the nature of work undertaken or has made any case that any new facility has been constructed and tha .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

was certainly in the nature of extension of business because the value of business and property would be increased and it amounts to capital expenditure and the Order passed by the ld CIT(A) is bases on conjecture and surmises and therefore liable to be set aside and order passed by the Ld. A.O. is to be confirmed. 6. Submissions on behalf of Assessee On the contrary it is argued by the Ld Counsel of the Assessee that the work carried by the Assessee is not disputed by the Ld. A.O. and there ar .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the hands of the concerned creditor had accrued as assumed by him but the same was not actually received by the party, We nd that Ld A.O. erred in interpreting that there has been an extension of the existing business and considered the explanation of the appellant as unsatisfactory and with this interpretation disallowed the interest amount. find that Ld A.O. erred in interpreting that there has been an extension of the existing business and considered the explanation of the appellant as unsat .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version