2019 (7) TMI 921

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....: - A)Disallowance of interest - Rs. 7,03,401/- 1) The learned Commissioner of Income Tax (Appeals) - 17, Mumbai [CIT(A)] erred on facts and in law in confirming the order of the Income Tax Officer - 10(3)(4), Mumbai (AO) disallowing interest of Rs. 7,03,401/- without appreciating that the appellant had sufficient non-interest bearing funds to give the advances. 2) The appellant prays that the disallowance of interest of Rs. 7,03,401/- as made by the AO and as confirmed by the CIT(A), may be deleted, B)Taxing rent of Rs. 21,150/- 3) The learned CIT(A) erred on facts and in law in confirming the order of the AO taxing the rent received by the appellant of Rs. 21,150/- as the income of the appellan....

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....ees is a capital receipt and hence, should be dealt with accordingly. 2.1 Facts on record reveal that the assessee being resident corporate assessee has been assessed u/s 143(3) for impugned AY on 19/03/2015 wherein the income has been assessed at Rs. 5.21 Lacs as against Nil return filed by the assessee on 12/11/2012. 2.2 During assessment proceedings, it transpired that the assessee advanced interest-free deposit for Rs. 58.61 Lacs whereas the assessee was paying interest @12% on its borrowings. The aggregate borrowings stood at Rs. 1338.35 Lacs and the assessee debited interest of Rs. 82.68 Lacs under the head work-in-progress [WIP] since the projects were not completed and the assessee was following project completion method of ac....

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....responding amount. 3. Aggrieved, the assessee agitated the same, however, without any success before Ld. first appellate authority vide impugned order dated 24/03/2017 where the stand of Ld. AO got confirmed. Aggrieved, the assessee is in further appeal before us. 4. The Ld. Authorized Representative for assessee contested the stand of lower authorities whereas Ld. DR supported the stand in the impugned order. 5. We have carefully heard the rival submissions and perused relevant material on record. The perusal of financial statements as placed on record reveal that the assessee's free funds in the shape of Share Capital and Reserves far exceeds the interest free deposits granted by the assessee. Another feature to be noted is th....