TMI Blog2022 (11) TMI 176X X X X Extracts X X X X X X X X Extracts X X X X ..... t the case of the assessee as no such interest expenses were there. Moreover, the proviso to section 36 clause (1) sub-clause (iii) also makes the interest on capital asset to be disallowed till it commences production. Assessee could not demonstrate any nexus in improvement of land to preoperative expenses. Hence, it cannot be capitalised. Even reliance placed by the assessee in the case of Cosmic Kitchen Pvt. Ltd. [ 2005 (11) TMI 530 - ITAT DELHI] is also mis-placed since the facts in assessee s case are substantially different where none of the expenses have been incurred towards improvement of the land. As been rightly observed by the CIT(A) that whatever expenses the assessee is claiming are pre-operative expenses and they are allo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olitary grievance of the assessee is that the revenue authorities have disallowed the indexed cost of expenses of Rs. 13,18,124/- by not treating the same as capital expenditure. 3. The brief facts of the case are that the assessee has e-filed return of income on 31-10-2015 declaring total income of Rs. 10,62,89,980/-. Survey u/s 133(2) of the Income-tax Act, 1961 (hereinafter referred to as the Act ) was conducted on 23-2-2015 on the sister concern M/s. Mehul Construction Pvt. Ltd., and the assessee declared additional income of Rs. 10,76,57,870/- as capital gain. The assessee sold part of the land to M/s. GokulMauli Sugars Ltd., on which capital gain has arisen. During the assessment proceedings, the A.O noted that the assessee has de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ix as to which part of expenses are related to the improvement of the land. The assessee relied on the decision of Hon ble Supreme Court in the case of Chellapalli Sugars Ltd. Vs. CIT (1975) 98 ITR 0167(SC). However, it does not support the case of the assessee as no such interest expenses were there. Moreover, the proviso to section 36 clause (1) sub-clause (iii) also makes the interest on capital asset to be disallowed till it commences production. The assessee could not demonstrate any nexus in improvement of land to preoperative expenses. Hence, it cannot be capitalised. Even reliance placed by the assessee in the case of Cosmic Kitchen Pvt. Ltd. I.T.A. No. 5549/D/2010 is also mis-placed since the facts in assessee s case are substantia ..... X X X X Extracts X X X X X X X X Extracts X X X X
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