TMI Blog2019 (6) TMI 742X X X X Extracts X X X X X X X X Extracts X X X X ..... n thereof and as such proviso to section 36(1)(iii) is attracted. Moreover, when it is undisputed fact that the assessee has invested borrowed money along with his own funds in various office properties in order to extend its business but the same was never put to use during the year under assessment, no deduction is allowable. Assessee that section 36(1)(iii) does not speak about immovable properties rather speaks of assets only is also not sustainable because assessee cannot be allowed to blow hot and cold in the same breath as the assessee has tried to prove on record that he has invested the borrowed money for extension of the office i.e. office space which are certainly an immovable property/asset but the same has never been put to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tances of the case. 2) The action of Ld CIT(A) in upholding the action of Ld AO in disallowing a sum of ₹ 5,34,191/- u/s 36(1)(iii) inspite of fact that the assessee had sufficient amount of Interest free fund in the form of own capital which far exceeds amount of investment in assets is illegal, arbitrary, unwarranted, uncalled for and against the facts and circumstances of the case. 3) The action of Ld CIT(A) in adopting a method for computing amount of disallowance of Interest amounted to ₹ 5,34,191/- is not prescribed under the Income Tax Act, 1961 or rules made there under is illegal, arbitrary, unwarranted, uncalled for and against the facts and circumstances of the case. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /- by way of disallowance made u/s 36(1)(iii) of the Act. 3. Assessee carried the matter by way of an appeal before the ld. CIT (A) who has restricted the addition made by the AO to ₹ 5,34191/- by partly allowing the appeal. Feeling aggrieved, the assessee has come up before the Tribunal by way of filing the present appeal. 4. We have heard the ld. Authorized Representatives of the parties to the appeal, gone through the documents relied upon and orders passed by the revenue authorities below in the light of the facts and circumstances of the case. 5. Before proceeding further, we would like to extract the provisions contained u/s 36(1)(iii) and proviso for ready perusal as under :- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder proviso to section 36(1)(iii), the same is not allowable expenditure. It is also not in dispute that that proviso for extension of existing business inserted w.e.f. 1.4.2004 to section 36(1)(iii) is applicable to the facts and circumstances of the case. 7. The ld. AR for the assessee contended inter alia that the detail of investment shows that a total of ₹ 2,63,87,111/- was invested out of which a sum of ₹ 31,04,845/- was invested during the year under assessment and balance sum of ₹ 2,32,82,266/- was invested prior to the assessment; that advance for a property given is an asset/capital asset; that in the earlier years also, investment was made but no disallowance was made by the Revenue; that investm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (A). 9. When we examine the proviso to section 36(1)(iii), its opening lines are any amount of interest paid in respect of capital borrowed for acquisition of asset shall not be allowed as deduction . In this case, first of all, assessee has failed to explain the purpose for availing the loan from the Citi Bank. Secondly, though the assessee has booked various spaces for office use but he has never taken possession thereof and as such proviso to section 36(1)(iii) is attracted. Moreover, when it is undisputed fact that the assessee has invested borrowed money along with his own funds in various office properties in order to extend its business but the same was never put to use during the year under assessment, no deduction i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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