https://www.taxtmi.com/css/info/rss_sitemap/rss_feed.css?v=1746094055 https://www.taxtmi.com Business/Tax/Law/GST/India/Taxation/Policies/Legal/Corporate Tax/Personal Tax/Vat Law/Legal Information/Tax Information/Legal Services/Tax Services Tax Management India. Com / MS Knowledge Processing Pvt. Ltd. All rights reserved. One stop solution for Direct Taxes and Indirect Taxes https://www.taxtmi.com/caselaws?id=424158 https://www.taxtmi.com/caselaws?id=424158 Deduction of interest expenditure u/s 36(1)(ii) - diversion of the assessee s interest bearing funds for making the interest free investment - assessee had during the year under consideration invested in OPCD. Although, it was the claim of the assessee that OPCD was redeemable at an aggregate return of 12% p.a, however, the same did not find favor with the A.O as he was of the view that the assessee had invested in OPCD @0.1% p.a. - HELD THAT:- We concur with the view taken by the CIT(A) that as the assessee had own funds which were far more than the investments in OPCD, therefore, the presumption would be that the investments were made from own funds and no disallowance of any part of interest expenditure claimed by the assessee u/s 36(1)(iii) was called for in the hands of the assessee. Our aforesaid view is fortified by the judgments of the Hon ble High Court of Bombay in the case of CIT vs. Reliance Utilities [ 2009 (1) TMI 4 - BOMBAY HIGH COURT] and CIT-2, Mumbai Vs. HDFC Bank Ltd. [ 2014 (8) TMI 119 - BOMBAY HIGH COURT] - We, thus, finding no infirmity in the view taken by the CIT(A) as regards the aforesaid issue under consideration uphold his order to the said extent. The Ground of appeal No. 1 is dismissed. Addition towards sales promotion expenses and Advertisement expenses made by the A.O by capitalizing the same to the work-in-progress - CIT-A deleted the addition - HELD THAT:- We find that the selling and distribution costs, advertisement expense etc. are to be excluded from the cost of inventories as they do not contribute towards bringing the inventories to their present location and condition. Our aforesaid view that selling costs are no to be considered as a part of the project cost i.e W.I.P cost is also supported by the Guidance Note on Accounting for Real Estate Transactions (Revised 2012) wherein at Para 2.4(b) it is provided that selling costs are not to be considered as part of the construction costs and development costs. Hon ble High Court of Delhi in the case of Gopal Das Estates Housing Pvt. Ltd. [ 2019 (3) TMI 1272 - DELHI HIGH COURT] had observed, that that the expenditure incurred on advertising being necessary for promotion of its business is to be allowed as a business expenditure and would not form part of the project cost. Apart from that, we find that as the assessee s claim for deduction of sales promotion, advertisement etc. was consistently allowed by the department not only in the preceding but also in the succeeding years, therefore, there was no justification on its part in declining the assessee s claim for deduction of the said expenses during the year under consideration.We, thus, in terms of our aforesaid observations finding no infirmity in the view taken by the CIT(A) who by a well reasoned order had vacated the disallowance of the assessee s claim - Decided in favour of assessee. Case-Laws Income Tax Mon, 11 Oct 2021 00:00:00 +0530