TMI Blog2023 (7) TMI 379X X X X Extracts X X X X X X X X Extracts X X X X ..... funds for the purpose of creating capital assets, therefore, the interest expenditure is of capital nature and made the addition disallowing the proportionate interest charged to P L account - HELD THAT:- We find that the assets were put to use prior to the claim of interest. It is also an undisputed fact that the borrowed capital were utilized for giving advances to the suppliers of the milk which cannot be on capital account. No error or infirmity in the findings of the CIT(A). The ground dismissed. Undisclosed investment in land - assessee had failed to substantiate the reason of difference between circle rate of the land in question and price actually paid to the seller as contended that section 50C is not applicable to the assessee as there is no sale of capital asset - HELD THAT:- CIT(A) was convinced that the relevant provisions applied by the AO are not applicable on the facts of the case and no other evidences have been brought on record to show that the assessee has paid consideration over and above the registered value the additions were accordingly deleted. Appeal of the revenue is partly allowed. - ITA No. 4380/Del/2018 - - - Dated:- 7-7-2023 - Sh. N. K ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... even after providing sufficient opportunity to the assessee company? 5. Whether on the facts and circumstances of the case, the Ld. CIT(A) is legally justified in deleting the addition of Rs. 12,26,410/- on account of undisclosed investment in land by ignoring the findings of the AO in assessment order that the assessee had failed to substantiate the reason of difference between circle rate of the land in by ignoring the findings of the AO in assessment order that the assessee had failed to substantiate the reason of difference between circle rate of the land in question and price actually paid to the seller? 3. The appeal was first listed for hearing on 09.08.2021 on which date none appeared on behalf of the assessee and the appeal was adjourned. Several notices were issued thereafter but on each occasion none represented the assessee. Inspite of so many repetitive notices neither the assessee nor its authorized representative is attending the proceedings, therefore, we are left with no choice but to proceed exparte. 4. The DR was heard at length. Case records carefully perused. 5. Briefly stated the facts of the case are that the assessee during the year under con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 3,00,000/-+19258000/- +2359600/- u/s. 68 of the Act. 12. Proceeding further the AO found that the assessee has made certain advances out of borrowed funds and was of the opinion that the assessee has used borrowed funds in making interest free advances and, therefore, disallowed proportionately interest and bank charges and made addition of Rs. 689283/-. 13. Before the CIT(A) it was strongly contended that all the parties have confirmed the credit transactions and have filed necessary bank statements. It was explained that the share capital of Rs. 3 lacs was received from the promoter/ directors of the company whose identity and credit worthiness can be verified from the submission made during the assessment proceedings. The CIT(A) further observed that the confirmation letter, copy of bank statement and ITR were filed before the AO in the case of Mrs Kamlesh Singh and also in the case of Kuldeep Nagar and Baljender Nagar. Further referring to judicial decisions the CIT(A) concluded by observing that the money has been received from the promoters/ directors who are assessed to tax and have defined sources of income. The CIT(A) further observed that the transactions are r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case. As per section 36(1)(iii) of the IT Act, the appellant is entitled to claim the deduction in respect of the amount of the interest paid on the capital borrowed for the purposes of the business or profession. The undisputed facts are that the capital was utilized for the purchase of raw material and plant machinery. It cannot be said that the utilization of funds on the above was not related with the business of the assessee company. The only restriction for the allowance of the interest is that the asset for which the capital has been borrowed should be put to use. Interest paid for any period beginning from the date on which the capital was borrowed for acquisition of the .asset till the date on which such asset was first put to use shall not be allowed as deduction. The Assessing Officer has not disputed the fact that assets were put to use and interest was claimed after that period. Moreover, the appellant states that borrowed capital was also utilized for the purchase of raw material and advances given to the suppliers of the milk. Hence, no disallowance can be made by the Assessing Officer. Accordingly, addition is deleted and the ground taken by the appellant is allow ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
