2014 (1) TMI 704

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....sed by the Ld. CIT(A)-1, Bhubaneswar is capricious, invalid, illegal and bad in law. 2. The Ld. CIT(A)-1, Bhubaneswar has not considered the available material facts while dismissing the appellant's plea of wrong disallowance of interest of Rs.7,35,627/- on term loan." In revenue's appeal revenue has raised following grounds: "1. On the facts and in the circumstances of the case, the Ld. CIT(A) is not justified in restricting the disallowance of interest to Rs.7,35,627/- in place of Rs.11,86,555/- made by the AO, when the entire expenditure pertained to capital work in progress shown by the assessee and therefore was capital in nature. 2. On the facts and in the circumstances of the case, the Ld. CIT(A)is not justified in deleti....

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....to the capital asset. It was the further submission that the repairs and renovations having been capitalized the interest on the term loan used for the renovations of the capital asset was not liable to be allowed as revenue expenditure. 5. We have considered the rival submissions. At the out set, it is admitted that the term loan was for repair and renovation of the capital asset being industrial shed. The security for the term loan was also the said asset itself. The assessee has also capitalized the cost of the repairs and renovations. Obviously, once the cost of repairs and renovations is capitalized, the interest on the loan taken for the said repairs and renovations cannot be treated as revenue expenditure. Under the circumstances,....

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....s of the shed. It was the submission that the balance of Rs.55,088/- was inspection charges of the bank officials for the stock and the bank charges and commission in C/A and cash credit account. It was the submission that the order of the Ld. CIT(A) is liable to be upheld. 9. We have considered the rival submissions. Admittedly, the assessee has explained the source for the sum of Rs.33 lakh. The AO has only on presumption estimated 40% of the cash credit loans to have been used for the repairs and renovations of sheds. Additions cannot be made on presumptions especially when the assessee has produced factual evidence to prove that the balance of the cost in respect of the repairs and renovations were from sister concern. Under the circ....