9911796707
TMI Blog2018 (1) TMI 1588X X X X Extracts X X X X X X X X Extracts X X X X ..... e Ld. CIT(A) erred in allowing capitalization of interest expenses of Rs. 2,94,31,532/- without allowing opportunity to AO and without verifying that the loan has been taken to invest in capital asset. 2. Without prejudice to above, the Ld. CIT(A) failed to appreciate the fact that rate of interest claimed is also exorbitant i.e.@32% p.a. which was not for the purpose of business. 3. The appellant prays that the order of CIT(A) on the above ground be set aside and that of the assessing officer is restored. The assessment for impugned AY was framed u/s 143(3) by Ld. Deputy Commissioner of Income Tax Officer-10(3), Mumbai [AO] on 10/01/2014. 2.1 Facts leading to the same are that the assesse being resident ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t prejudice statement seeking capitalization of interest expenses and allowance of small administration expenses for running the company. Ld. AO observed that the appellant was stated to be involved in trading of flats and during the year under consideration had shown NIL sales and NIL stock-in-trade at year end against which expenses of Rs. 2,94,73,439/- were claimed in the Profit and Loss account which included finance expenses of Rs. 2,94,31,532/-. He found that the appellant had shown Rs. 13.20 crore as advance for purchase of flat under the head 'current assets.' It was further observed that the funding for purchase of flats was received from two companies to whom the appellant had paid interest @32% p.a. However, as the Ld. AO f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that for carrying out the said business activity, the appellant had borrowed funds and utilized the same for purchase of flats, a fact which has not been controverted by Ld. AO. I also find that the appellant has raised Ground No.4 which is a 'without prejudice' ground by stating that even if for any reason the purchases of flats was not considered as its business activity, in that case, the interest expenses incurred towards the same amounting to Rs. 2,94,31,532/- ought to have been capitalized and the balance expenses allowed as deduction in the nature of maintenance of status as a company. On appreciation of the entire facts, whereas I find that the appellant was working more as an investor rather than a trader of flats and, therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 4. We have heard the rival contentions and perused relevant material on record. After going through the same, we concur with the stand of Ld. first appellate authority since we have noted that Ld. CIT(A) has only upheld the stand of Ld. AO. From the impugned order, it is quite evident that the Ld. CIT(A) has only accepted the alternative claim of the assessee and allowed capitalization of interest expenditure since no business activity was carried out by the assessee during impugned AY. The Ld. AO, in paragraph 3.2 of the quantum assessment order has also expressed similar view. Regarding rate of interest of 32%, the revenue could not point out how the same was excessive or unreasonable in the circumstances. The other expenditure of Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
