2018 (5) TMI 743

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....te Limited Company and is in the business of cold storage and trading in potatoes. The issue that arises for my adjudication is whether the disallowance made by the Assessing Officer of an amount of Rs. 5,64,480/-, being interest claimed u/s 36(1)(iii) of the Act is correct as the facts and circumstances of the case. 2.1. The assessee had taken loan from Allahabad Bank and paid interest @ 8.82% amounting to Rs. 38,35,069/-. The assessee had invested an amount of Rs. 64,00,000/- as share application money in a company M/s. Bhaktimoyee Cold Storage Pvt. Ltd. The Assessing Officer was of the view that the loan taken from Allahabad Bank was diverted for making investment by way of share application money in M/s. Bhaktimoyee Cold Storage Pvt. L....

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.... the interest paid in respect of capital borrowed for the purposes of the business or profession :- Provided that any amount of the interest paid, in respect of capital borrowed for acquisition of an asset for extension of existing business or profession (whether capitalized in the books of account or not); for any period beginning from the date on which the capital was borrowed for acquisition of the asset till the date on which such asset was first put to use, shall not be allowed as deduction. 4.1. This proviso was inserted w.e.f 01/04/2004. For the impugned Assessment Year, the wording that is crucial "acquisition of an asset for the extension of existing business or profession". This was omitted by the Finance Act, 2015. Various C....