TMI Blog2018 (9) TMI 63X X X X Extracts X X X X X X X X Extracts X X X X ..... he five partners of the firm contributed ₹ 5,20,00,000/- and thereafter the loan from the Axis Bank Ltd. was used to pay the money to the partners and to the lenders. The observation of the AO that interest of ₹ 1,08,73,997/- has to be apportioned between two buildings i.e. building A and B in the ratio of investment according to which the interest attributable to building A comes to ₹ 36,97,159/- and building B ₹ 71,76,838/-. We direct the AO to allow the interest of ₹ 1,02,37,297/- in the proportion of 34% to building A and 36% to building B. Resultantly, ₹ 67,56,616/- is admissible under section 2(b)B and ₹ 34,80,681/- is to be treated as business interest be set off against the business income of the assessee. The AO is accordingly directed. - Decided partly in favour of assessee - ITA No. 565/M/2015 - - - Dated:- 24-8-2018 - SHRI C.N. PRASAD, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER Assessee by : Shri Vimal Punmiya, A.R. Revenue by : Shri V. Justin, D.R. ORDER Per Rajesh Kumar, Accountant Member: The present appeal has been preferred by the assessee against the order dated 07.11.2014 of the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs.6,55,92,470 Thereafter, assessee let out the commercial bank for a monthly rent of ₹ 15 lakhs to Axis Bank Ltd. and also borrowed a loan of ₹ 8,45,00,000/- from the Axis Bank Ltd. and thus claimed the interest paid to Axis Bank Ltd. and Ramesh S. Shah Family Trust as allowable deduction under section 24 of the Act. According to the AO, assessee has already acquired the property before borrowing money from the Axis Bank Ltd. and therefore asked the assessee to explain as to why the interest is admissible under section 24B of the Act. The assessee submitted that the loan was taken from Axis Bank Ltd. to repay the existing creditors from whom the money was borrowed for the construction of property as under:- Date Particulars Amount Paid 09/10/2009 Loan taken 8,45,00,000 15/10/2009 1 Manju B. Shah 75,00,000 75,00,000 15/10/2009 2 Mahendra Loonkar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... B of the Act. However, AO further observed that the investments as appearing in the balance sheet as on 31.03.2009 was ₹ 12,47,74,629/- as per details as under: Investment in Sumer Heights Building A ₹ 4,21,16,550 Investment in Sumer Heights Building B ₹ 8,26,58,079 Rs.12,47,74,629 According to the AO if the loan of ₹ 8,26,58,079/- is taken for the purpose of construction of building A and B then the same can not be attributed to the construction of building B only and has to be divided between the two properties according to the percentage of investments which the AO worked out as under:- Name of the building Cost 9% of investment Total Interest paid Proportionate interest allowable Building A 4,21,16,550 34% 36,97,159 Building B 8,26,58,079 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be apportioned in the ratio of investments in the building-A and B which he bifurcated into two buildings as building-A ₹ 36,97,159/- and building-B ₹ 71,76,838/-. The Ld. A.R. vehemently submitted that the AO has misrecognized the fact that ₹ 71,76,838/- pertained to the building-B whereas ₹ 36,97,159/- pertained to building-A. Finally, the Ld. A.R. prayed before the Bench that in view of the said finding the interest of ₹ 1,02,37,297/- should be allowed under section 24B as claimed by the assessee. The Ld. A.R. has also taken without prejudice submission and argument that if at all the first prayer of the assessee is not accepted by the Tribunal ₹ 71,76,838/- should be allowed under section 24B of the Act and ₹ 36,97,159/- may be allowed as business expenditure to be off set against the business income of the assessee. 8. The Ld. D.R., on the other hand, relied on the orders of authorities below and submitted that since the assessee is completely failed in establishing a nexus between the borrowed funds from the Axis Bank Ltd. and the repayment to the existing lenders and therefore the AO has rightly disallowed the entire interest as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 09/10/2009 Loan taken 8,45,00,000 15/10/2009 1 Manju B. Shah 75,00,000 75,00,000 15/10/2009 2 Mahendra Loonkar 1,50,00,000 1,50,00,000 26/11/2009 1,00,00,000 29/12/2009 5,00,000 2,55,00,000 12/11/2009 3 Ramesh S. Shah HUF 73,00,000 26/11/2009 1,00,00,000 29/11/2009 50,00,000 2,23,00,000 26/11/2009 4 Palash B. Shah 1,00,00,000 29/12/2009 25,00,000 1,25,00,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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