TMI Blog2020 (1) TMI 1112X X X X Extracts X X X X X X X X Extracts X X X X ..... decision afresh, as per Law. In this view of the matter, we set aside the impugned order on this issue and restore the matter in issue to the file of Ld. CIT(A) with a direction to re-decide the same. Disallowance of expenses incurred on account of project and construction expenses - HELD THAT:- Admittedly, the assessee is engaged in the business of developing and promoting commercial complexes. The assessee explained that it is under obligation to make minor/major modification to suit the convenience of the lessee. Therefore, fitment charges are incurred for better occupancy by the customers. Since the cost of construction is part of stock-in-trade and income have been offered accordingly, therefore, if the fitment charges are incurred for leased-out premises, the same would be revenue in nature. No new capital came into existence and no such finding have been given by the A.O. Therefore, considering the nature of business of assessee, CIT(A) correctly deleted the addition because the expenditure is related to the business income of the assessee. Ground No.2 of the appeal of the Revenue is dismissed. Disallowance of interest - disallowance has been made on proportionat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The agreement in question was merely an arrangement to show sale in preceding assessment year and no profit have been booked in assessment year under appeal. The A.O. accordingly estimated the profit @ 15% on such sale and made the addition. The assessee submitted before the Ld. CIT(A) that addition is wholly wrong. The assessee has sold commercial space to M/s. Bansal Corporation Ltd., for a sum of ₹ 14.57 crores in preceding A.Y. 2007-2008 through an agreement Dated 31.03.2007. Thus, it was rightly booked as sale in assessment year and this fact have been accepted by the A.O. in the Order under section 143(3) of the I.T. Act, 1961. All documentary evidences were produced. The assessee has filed return for this year and paid the MAT of ₹ 8,24,808/- on book profit, therefore, the addition is without any basis. The Ld. CIT(A) found that sale have not been disputed by the A.O. in the preceding A.Y. 2007-2008, therefore, following the Order for the A.Y. 2007-2008, deleted the addition. 4. The Ld. D.R. contended that the Order of the A.O. under section 143(3)for the A.Y. 2007-2008 is filed at page No.25 of the PB which is silent of this matter in issue an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... further ₹ 5 lakhs was paid to M/s. Marble Hut Pvt. Ltd., for composite panels and MS Steel. These expenses have been paid as agreed for renovation, civil work and interior of the premises as required for the purpose of leasing. The assessee submitted before the Ld. CIT(A) that A.O. made this addition without looking into the facts of the case. The assessee is in the business of promoting and developing of commercial complexes. The commercial shop/space developed by the assessee represents stock-in-trade and no capital asset came into existence. The expenditure incurred on development of commercial projects is charged to P L A/c which ultimately gets allocated to the projects and closing inventories is valued accordingly taking into account the total expenditure incurred during the year. Therefore, expenditure attributed to the sales made during the year are expenditure revenue in nature and cannot be considered as capital expenditure. The A.O. was informed that even after completion of the project, the assessee was under an obligation to maintain the premises developed by it and to carry-out minor/major modifications to suit the convenience of the shop owner and public at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - on account of disallowance of interest. 12. The A.O. made the above disallowance out of total interest of ₹ 1,96,48,636/- paid by the assessee during the year under consideration. The disallowance has been made on proportionate basis invoking the provisions of Section 36(1)(iii) of the I.T. Act and relying upon the decision of Hon ble Punjab Haryana High Court in the case of Abhishek Industries Ltd., 157 Taxman 257 (P H). The assessee submitted before the Ld. CIT(A) that addition is wholly unjustified. The assessee has not utilised any borrowed funds to make investment through advance to sister concern. Detailed chart is reproduced in the appellate order which would show that assessee had not utilised its borrowed funds to make advance to the sister concern or other parties. In fact, the borrowed funds have reduced from ₹ 19.33 crores at the beginning of the year to₹ 8.74 crores at the close of the year and amount due from sister concern have been reduced to ₹ 2.44 crores from ₹ 18.46 crores at the beginning of the year. Therefore, by no stretch of imagination, it could be concluded that during the year under consideration, asses ..... X X X X Extracts X X X X X X X X Extracts X X X X
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