TaxTMI 
TaxTMI 
2018 (9) TMI 63
X X X X Extracts X X X X
X X X X Extracts X X X X
.... off against the business income of the assessee. 3. The facts in brief are that the assessee is a partnership carrying on the business of real estate developer during the year the assessee has shown a loss of Rs. 2,33,636/- from house property which was arrived at after claiming interest of Rs. 1,08,73,636/- under section 24 of the Act comprising Rs. 1,02,37,297/- paid to Axis Bank Ltd. and Rs. 6,36,700/- paid to Ramesh S. Shah Family Trust. The assessee has developed property known as Sumer Chambers along with M/s. R.K. Builders and project was completed in A.Y. 2005-06. After completion of the project, the assessee received its share in A-wing which is residential area and B-wing which is a commercial area and same were shown as closing stock in the balance sheet of the assessee. Thereafter, assessee sold part of the total area shown in closing stock during A.Y. 2005-06 and 2007-08 and income was offered for taxation under the head "Income from business and profession". The unsold area was converted from stock in trade to investment and was shown as under: Investment in Sumer Heights - Building "A" Rs.2,78,76,708/- Investment in Sumer Heights - Building "B" Rs.6,8....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Rs.5,15,05,674 Sumerchand H. Shah HUF Rs. 71,77,123 Rs.6,55,92,470 5. However, the loan taken from Axis Bank Ltd. was utilised to repay the five creditors as stated hereinabove therefore according to the AO there is no nexus between borrowing and repayment of the previous loan and therefore no deduction is admissible under section 24B of the Act and the CBDT circular No.28 dated 20.08.1969 (F.No.8/8/69-IT (A-I) as the said circular provides that only loan borrowed to repay the previous loan taken for the construction of the property has to be considered at the time of allowing deduction under section 24B of the Act. However, AO further observed that the investments as appearing in the balance sheet as on 31.03.2009 was Rs. 12,47,74,629/- as per details as under: Investment in Sumer Heights - Building "A" Rs. 4,21,16,550 Investment in Sumer Heights - Building "B" Rs. 8,26,58,079 Rs.12,47,74,629 According to the AO if the loan of Rs. 8,26,58,079/- is taken for the purpose of construction of building A and B then the same can not be attributed to the construction of building B only and has to be divided between the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n of the Sumer Heights Building and established the direct nexus between the construction of property which is let out and the borrowing which is made from the Axis Bank Ltd. The Ld. A.R. drew our attention to para No.4 of assessment order wherein the AO has recorded a finding of fact that the interest of Rs. 1,08,73,997/- has to be apportioned in the ratio of investments in the building-A and B which he bifurcated into two buildings as building-A Rs. 36,97,159/- and building-B Rs. 71,76,838/-. The Ld. A.R. vehemently submitted that the AO has misrecognized the fact that Rs. 71,76,838/- pertained to the building-B whereas Rs. 36,97,159/- pertained to building-A. Finally, the Ld. A.R. prayed before the Bench that in view of the said finding the interest of Rs. 1,02,37,297/- should be allowed under section 24B as claimed by the assessee. The Ld. A.R. has also taken without prejudice submission and argument that if at all the first prayer of the assessee is not accepted by the Tribunal Rs. 71,76,838/- should be allowed under section 24B of the Act and Rs. 36,97,159/- may be allowed as business expenditure to be off set against the business income of the assessee. 8. The Ld. D.R., o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....bsp; Loan taken 8,45,00,000 15/10/2009 1 Manju B. Shah 75,00,000 75,00,000 15/10/2009 2 Mahendra Loonkar 1,50,00,000 1,50,00,000 26/11/2009 1,00,00,000 29/12/2009 5,00,000 2,55,00,000 12/11/2009 3 Ramesh S. Shah HUF 73,00,000 26/11/2009 1,00,00,000 29/11/2009 50,00,000 2,23,00,000 26/11/2009 4 Palash B. Shah 1,00,00,000 29/12/2009 25,00,000 1,25,00,000 20/10/2009 5 Ruchira R. Shah 1,67,00,000 1,67,00,000 8,45,00,000 The contention of the AO was that....