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TMI Blog2022 (4) TMI 962X X X X Extracts X X X X X X X X Extracts X X X X ..... mstances of the case and in law, the learned CIT(A) erred in holding that the claim made by the appellant for deduction of interest of Rs. 4,35,36,783, under section 36(1)(iii) of the Act was not allowable. 2. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in not following decisions of his predecessors as well as various decisions of the Hon'ble ITAT, which were admittedly on the same issue on identical set of facts and, hence, binding on the CIT(A)." 3. The only issue arising in present appeal is with regard to disallowance of deduction of interest under section 36(1)(iii) of the Act. 4. The brief facts of the case pertaining to this issue as emanating from the records are: The assessee is a priv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the interest is periodic cost; hence, the claim in the year for which it belongs to. The assessee further submitted that such interest cost has been claimed as deduction under section 36(1)(iii) of the Act being interest pertaining to stock in trade of the assessee. 5. The Assessing Officer vide order dated 28 December 2016 passed under section 143(3) of the Act disagree with the submission made by the assessee and held that the assessee has not followed the correct method of accounting in respect of the expenses towards the project being developed by the assessee. The Assessing Officer further held that as per guidance note on accounting for real estate transaction issued by the Institute of Chartered Accountants of India, all expenses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alia, dismissed appeal filed by the assessee. Being aggrieved the assessee is in appeal before us 7. During the course of hearing, Shri Niraj D. Sheth, learned Authorised Representative ("learned A.R.") submitted that the issue is covered in favour of the assessee by various decisions of Co-ordinate Bench of Tribunal rendered in cases of group concern. 8. On the other hand, Shri T. Shankar, learned Departmental Representative by vehemently relying upon the orders passed by the lower authorities submitted that principle of matching concept is to be followed and all the expenses are to be given similar treatment and thus the expenses should be allowed in the year in which the corresponding income is offered to tax. 9. We have considered th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g of recognizing the income followed by the assessee. The present case involves the payment of interest of Rs. 4,39,49,000/- the interest paid to debenture holders, Financial institutions, Unsecured loan etc. It is not the case of the Revenue that the interest claim of Rs. 4,39,49,000/- and related capital borrowed was not utilized by the assessee for business purposes of the assessee. 5.8. The case of Wall Street constructions Ltd. (2006) 102 TTJ 505 is one where the assessee was following project completion method and therefore the ITAT held that the interest cost shall be debited to work in progress and allowed to be claimed as deduction only in the year in which the corresponding income is offered to tax. In the instant case, the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ract method and therefore, the said decision was not applicable to the facts of the case, as rightly held by learned first appellate authority. 6. Proceeding further, it is undisputed fact that the assessee was engaged in real estate construction and had borrowed capital for business purposes. No other diversion of income has been alleged by Ld. AO. As noted by Ld. CIT(A), the interest was paid to debenture holders, financial institutions as well as unsecured loan creditors and the loan was utilized for business purposes. The funds were borrowed for the purpose of construction and have gone into the projects of the assessee which constitute assessee's stock-in-trade and not capital asset. In view of these clear cut findings, the adjud ..... X X X X Extracts X X X X X X X X Extracts X X X X
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