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TMI Blog2016 (3) TMI 1468X X X X Extracts X X X X X X X X Extracts X X X X ..... -disallowed by the Learned Assessing Officer). 2. On the facts and circumstances of the case and without prejudice to the above ground, the CIT(A) has failed to appreciate that even if the interest is to apportioned to advances given for acquisition of plot to sister concern the same would need to be capitalized to the cost of the plot and cannot be disallowed. 3. The order under appeal is against the principals of natural law of equity and justice. 4. The Appellant reserves the right to add, alter, amend, delete, modify, omit, substitute, and vary any one or more or all grounds of appeal." 2. The brief facts of the case are that the assessee company is engaged in real estate development. For the relevant year, the assessee has c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 9,45,91,715/- to its P& L A/c in receipt of its borrowings, while on the other hand assessee has advanced interest free loan to Ackruti City Ltd. This being so, the AO held that interest charges @ 12% on the aggregate loan of Rs. 13,55,88,000/- to Ackruti City Ltd was disallowed and added back to the total income of the assessee. 3. Aggrieved by the order of the AO, assessee filed appeal before the CIT(A) and the CIT(A) after considering the submissions made by the assessee and restricted the interest at the rate of 12% on Rs. 1,06,68,050/- and the total of which works out to Rs. 12,80,166/- and the detailed reasoning for coming to the conclusion has been mentioned by the CIT(A) at para No. 1.3 which is rep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decisions of hon'ble courts (supra) From the perusal of the submissions and facts of the case it is noticed that the assesses nas a snare capital 0 Rs. 12 51 24,390/- and unsecured loan of Rs 2.78.4992,560/-, which is an undisputed fact. Secondly it is also undisputed that the assessee has made investment of Rs 2,78,52,00,000/- in the purchase of debentures and made advance to M/s. Ackruti City Ltd of Rs 13,55,85,000/-. Thirdly, the assessee has shown interest income from debentures at Rs. 6,16,51,506/- and debited the interest amount of Rs. 9,45,91,715/- to the profit & loss account on account of borrowings. Now, question arises whether the assessee has made the interest-free advance of Rs. 13,55,85,000/- out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee was able to establish direct nexus between interest-bearing borrowed funds and investments in shares, which had been sold during the year, said interest should be added to cost of acquisition: - Held, yes - Whether submission of the assessee that interest as well as other expenses should be allowed in its entirety on the ground that in earlier years no such disallowance was made, could not be accepted - Held, yes. (b) ACIT Vs. Eicher Ltd. - Whether assessing officer can estimate a part of expenditure incurred by assessee as expenditure incurred to produce non-taxable income on assumption that a part of expenditure must have necessarily been Incurred to produce non- taxable Income and disallow said part of expenditure u/s 14A - Hel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to its sister Concern out of unsecured loans and overdraft from the bank on Which interest has been debited to the profit & loss account therefore, the addition made by the AO is restricted to Rs. 12,80,166/- and the balance addition is deleted, hence ground of appeal is partly allowed." 3.1 Aggrieved by the order of the CIT(A) the assessee filed the present appeal before us on the grounds mentioned herein above. 4. We have heard the counsels for both the parties and we have also perused the material on record as well as the orders passed by the lower authorities and after considering the arguments as well as the orders passed by the revenue authorities we are of the considered opinion that the disallowance of interest, if any, is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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