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of <h1>Tribunal remands case for clarity on project investments, emphasizes project-wise analysis.</h1> <h3>Jogani & Sachdev Developments Versus Addl. CIT, Range 12(1), Mumbai</h3> Jogani & Sachdev Developments Versus Addl. CIT, Range 12(1), Mumbai - TMI Issues: Appeal against CIT (A) order treating interest paid as project cost, failure to allow deduction from interest received, ambiguity in AO's findings, lack of nexus between interest received and paid, need for project-wise analysis of expenses and investments.Analysis:1. The appeal was filed against the CIT (A) order regarding the treatment of interest paid as project cost. The assessee argued that the interest paid should be allowed as a deduction from the interest received. The assessee, engaged in the business of builders and developers, had various projects, including completed and pending ones.2. The AO proposed that the interest paid was related to investments in pending projects, leading to an addition of a specific amount. During the first appellate proceedings, the CIT (A) upheld the AO's decision, stating that the appellant failed to show a direct flow of funds between interest receipts and payments, confirming the addition.3. The assessee contended that the AO did not conduct a project-wise analysis of expenses and investments, leading to an incorrect finding that the interest payments were related to pending projects. The assessee requested an opportunity to demonstrate this with additional evidence.4. After hearing both parties, the tribunal found a lack of clarity regarding the source of investment in the pending projects. It was noted that the AO did not conclusively establish that the unsecured loans were used for completed projects. Therefore, the issue was remanded back to the AO for further examination and a clear determination.5. The tribunal directed the AO to pass a detailed order after providing the assessee with a fair opportunity to present their case. Ultimately, the grounds raised by the assessee were allowed for statistical purposes, and the appeal was allowed accordingly.This judgment highlights the importance of establishing a clear nexus between expenses and projects, emphasizing the need for detailed analysis and conclusive findings to support any additions or deductions in tax assessments.
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