2019 (6) TMI 742

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.... Ld CIT(A) in upholding the action of Ld AO in disallowing a sum of Rs. 5,34,191/- u/s 36(1)(iii) is illegal, arbitrary, unwarranted, uncalled for and against the facts and circumstances of the case. 2) The action of Ld CIT(A) in upholding the action of Ld AO in disallowing a sum of Rs. 5,34,191/- u/s 36(1)(iii) inspite of fact that the assessee had sufficient amount of Interest free fund in the form of own capital which far exceeds amount of investment in assets is illegal, arbitrary, unwarranted, uncalled for and against the facts and circumstances of the case. 3) The action of Ld CIT(A) in adopting a method for computing amount of disallowance of Interest amounted to Rs. 5,34,191/- is not prescribed under the Income Tax Act, 1961 or ....

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....e interest and thereby made an addition of Rs. 7,84,867/- by way of disallowance made u/s 36(1)(iii) of the Act. 3. Assessee carried the matter by way of an appeal before the ld. CIT (A) who has restricted the addition made by the AO to Rs. 5,34191/- by partly allowing the appeal. Feeling aggrieved, the assessee has come up before the Tribunal by way of filing the present appeal. 4. We have heard the ld. Authorized Representatives of the parties to the appeal, gone through the documents relied upon and orders passed by the revenue authorities below in the light of the facts and circumstances of the case. 5. Before proceeding further, we would like to extract the provisions contained u/s 36(1)(iii) and proviso for ready perusal as under :....

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.... that that proviso for extension of existing business inserted w.e.f. 1.4.2004 to section 36(1)(iii) is applicable to the facts and circumstances of the case. 7. The ld. AR for the assessee contended inter alia that the detail of investment shows that a total of Rs. 2,63,87,111/- was invested out of which a sum of Rs. 31,04,845/- was invested during the year under assessment and balance sum of Rs. 2,32,82,266/- was invested prior to the assessment; that advance for a property given is an asset/capital asset; that in the earlier years also, investment was made but no disallowance was made by the Revenue; that investment has been made by the assessee with intention for extension of his business; that the assessee has not got the possession o....

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....r acquisition of asset shall not be allowed as deduction". In this case, first of all, assessee has failed to explain the purpose for availing the loan from the Citi Bank. Secondly, though the assessee has booked various spaces for office use but he has never taken possession thereof and as such proviso to section 36(1)(iii) is attracted. Moreover, when it is undisputed fact that the assessee has invested borrowed money along with his own funds in various office properties in order to extend its business but the same was never put to use during the year under assessment, no deduction is allowable. 10. The contention of the ld. AR for the assessee that section 36(1)(iii) does not speak about immovable properties rather speaks of assets only....