TaxTMI 
TaxTMI 
2018 (12) TMI 1258
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....ke up the appeal filed by the assessee. In ground no.1, the assessee has raised the following grievances:- "In the facts and circumstances of the case and in law, the learned Commissioner of Income-tax (Appeals)-I, Baroda, erred in confirming disallowances and additions and the observations made by the assessing officer in the assessment order in respect of the following points. He erred in: 1. In respect of disallowance u/s 14A: a) In confirming the additional disallowance of 20,62,097/- u/s 14A read with Rule 3D by computing administrative expenses as per clause (iii) of Rule 8D is as per direction given by the Pr. CIT. He ought to have deleted the disallowance made by the assessing officer. b) In not a....
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.... in confirming disallowances and additions and the observations made by the assessing officer in the assessment order in respect of the following points. He erred..... 2. In confirming disallowance of interest expenditure of Rs. 63,52,554/- as capital expenditure on part of loan which was utilised for the purpose of the running business of the company." 7. So far as this grievance of the assessee is concerned, the relevant material facts are like this. During the course of impugned assessment proceedings, as a result of revision order passed by the Pr.CIT, the Assessing Officer noted that the assessee had borrowed Rs. 20 crores from Citi Bank and that there is no evidence that it has not been utilized for making capital expenses....
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....(Central-Kshitij). It was thus clear, according to the assessee, the loan was not taken to the new properties but for existing properties which were already completed. The CIT(A), however, rejected the said submissions and decided the issue against the assessee by observing that the loan was for the purpose of acquisition of multiplexes in different malls and, therefore, no part of interest can be allowed as deduction in computation of income. 9. Assessee is aggrieved and is in further appeal before us. 10. We have heard the rival contentions, perused the material on record and duly considered facts of the case in the light of the applicable legal position. 11. As learned Counsel has categorically pointed out, the borrowing is spec....
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.... shape of share capital, reserves and surplus, as well as net revenue from operations, we are of the view that alleged investment in WIP could be assumed as carried from these surplus funds. No notional interest ought to be calculated for capitalization. In order to fortify ourselves, we would like to refer to the decision of Hon'ble Bombay High Court in the case of CIT Vs. Reliance Utilities & Power Ltd., 313 ITR 340 (Bom). In view of the above, this ground of appeal is allowed." 12. The factual position about interest free funds being far from excess of the funds deployed in the new projects and absence of any factual findings about the diversion of funds is not even disputed by the learned Departmental Representative. In these cir....