2017 (3) TMI 1713

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....nses amounting to Rs. 67,04,063/- out of total expenses claimed of Rs. 69,77,956/- on the ground that the appellant was not engaged in any business activities during the year and therefore claim of expenses should not be allowed. 2. On the facts and circumstances of the case and in law, the CIT(A) has erred in confirming disallowance of interest expenses in relation to funds borrowed for various purposes including loan/advances given incidentally from which the appellant is earning interest income of Rs. 48,00,000/- 3. On the facts and circumstances of the case and in law, the CIT (A) has erred in directing without prejudice, disallowance of interest cost exceeding 12% of the borrowed fund (Disallowance figure not quantified in assessme....

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....single development project was being executed by the assessee during the year, therefore, it should have capitalized all these expenses to 'work-in-progress' and should not have claimed the same in the Profit & loss account. Accordingly, all the business expenditure aggregating to Rs. 69,77,956/- was disallowed. The AO thus, treated the entire interest income of Rs. 48,92,066/- as 'Income from other sources' and business income was computed at 'nil'. 3. Before the Ld. CIT (A) the assessee had submitted that the project undertaken by the assessee was under construction and all these construction expenses were capitalized to the work-in-progress account. Apart from that, the assessee had also given ICD of Rs. 4 crores to M/s. Radiant Tradeve....

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....es received by the assessee from M/s. Chinsha Property Pvt. Ltd. (an associate company) on 29.08.2008. On this fund the assessee has not paid any interest, hence it was interest free fund, whereas the assessee has incurred interest expenditure of Rs. 62,52,905/- which cannot be said to be incurred wholly and exclusively for the purpose of earning interest income of Rs. 48 lakhs. Accordingly, he confirmed the action of the AO. 4. Before us the learned counsel, Shri Vijay Mehta though did not pressed ground no.1, however, he mainly contended that the issue raised in additional ground should be admitted, because if the interest expenditure has been held to be not relatable to earning of interest income, then it, inter alia, it means that it i....

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.... ii. Transport Charges (HO) 1,24,626 iii. Professional Fees 1,81,995 iv. Expenses written off 81,153 v. Advertising Expenses 22,385 vi. Statutory Audit Fees 1,68,540 vii. Limited Review Fees 33,090 viii. Office Expenses 500 ix. Professional Tax 2,500 x. Bank Charges 35,123 xi. Interest on delayed payment of taxes 34,140   Total 69,77,957   Out of the aforesaid expenditure, those given at Sr. nos. ii to v have been allowed by the ld. CIT (A) to be capitalized and those at Sr. nos. vi to x have been allowed as revenue expenditure. The item at Sr. no. xi has been disallowed by the assessee itself. The major issue before us is mainly the interest cost, which has been apportioned towards advance given....