2015 (10) TMI 1880

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... during the F.Y. 2007-08, the assessee claimed a sum of Rs. 4,15,064/-as the interest paid on the unsecured loans. The Assessing Officer, in his order u/s.143(3) r.w.s.147, observed that out of the total unsecured loans of Rs. 36,00,235/-, an amount of Rs. 8,00,000/- was considered as non-genuine loan and disallowed (brought to tax) in the assessment of A.Y.2006-07, along with the interest claimed to have been paid on the said loan. During the current financial year also the assessee claimed interest payment on the said loan of Rs. 8,00,000/-. Hence the Assessing Officer disallowed interest claim (of Rs. 96,000/- calculated @ 12%) on the said non-genuine unsecured loan of Rs. 8,00,000/- and included in the total loans of Rs. 36,00,235/. The....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... this ground of appeal. Against this, the assessee is in appeal before us. 5. We have heard both the parties and perused the material on record. It is already observed that the loan is not genuine in earlier assessment years. When the principal loan itself is not genuine, there is no question of allowing of any interest on such non-genuine loan. Being so, disallowance of interest on on-genuine loan is justified. Regarding the disallowance of interest on the unsecured land utilized for the purchase of land, in our opinion, the interest incurred upto the date of sale deed registration of the land to be considered as capital expenditure, if it is treated as capital asset by the assessee and to be added to the cost of the land and interest i....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... year and not payable by the end of the close of the financial year 2008 relevant to the assessment year 2008-09. In our opinion, similar issue was considered by this Tribunal in the case of Shri N. Palanivelu v. ITO (40 ITR (Tri) 325), wherein it was held as under : "3. We have heard both the sides and perused the material on record. We find that the Special Bench of the Tribunal in the case of Merilyn Shipping and Transports vs. ACIT (2012) 136 ITD 23 (Visakhapatnam) and judgment of Gujarat High Court in the case of CIT vs. M/s. Vector Shipping Services (P) Ltd in ITA No.122 of 2013 dated 09.7.2013 held that sec 40(a)(ia) is not applicable when there is no outstanding balance at the end of the close of the year relevant to the assessme....