TaxTMI 
TaxTMI 
2019 (8) TMI 405
X X X X Extracts X X X X
X X X X Extracts X X X X
....o facts & law. 2. That on the facts and circumstances of the case & Law, the Ld. CIT(A) erred in deleting the addition of Rs. 14,39,12,048/- made on account of interest expense capitalized in real estate under development. 3. That on the facts and circumstances of the case & law, the Ld. CIT (A) erred in deleting the addition of Rs. 3,24,94,319/- made on account of all expenditure debited to profit and loss account. 4. That the appellant craves leave to add, alter, amend or forego any ground(s) of the appeal raised above at the time of hearing. ITA No. 1464/Del/2016 "1. That the order of the ld. CIT(A) is erroneous & contrary to facts & law. 2. That on the facts and circumstances of the case & law, the Ld. CIT(A) erred in deletin....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ddition of Rs. 3,24,94,319/- made on account of all expenditure debited profit and loss account. As the Assessing Officer was wrongly mentioned that the benefits was not commenced. The Ld. DR relied upon the Hon'ble Apex Court order in case of Add.CIT vs. Tulip Star Hotels Ltd. (2012) 21 taxmann.com 97 (SC) and Hon'ble Delhi High Court decision in case of Punjab Stainless Steel Inds. Vs. CIT (2011) 196 Taxman 404 (Delhi). 6. The Ld. AR relied upon the assessment order as well as CIT(A) order. 7. We have heard both the parties and perused all the relevant material available on record. As regards Ground No. 1, the CIT(A) has deleted this addition on the basis of Hon'ble Supreme Court decision in case of SA Builders Ltd. 288 ITR 1. The Asses....
X X X X Extracts X X X X
X X X X Extracts X X X X
....llant, it is observed that there is no dispute as far as the allowability of interest expenses u/s 36(1)(iii) of the Act is concerned. The facts of the case of Malayalam Plantation Ltd. on which the AO has relied, are entirely different. The appellant has relied upon the decision of Hon'ble Supreme Court in the case of SA Builder Limited, it was held by the Hon'ble Court that the expression "for the purpose of business" occurring in Section 36(1)(iii) is wider in scope than the expression "for the purpose of earning profits". In order to claim a deduction, it is enough to show that the money is expended on ground of commercial expediency. The AO has wrongly interpreted the fact of the case and mentioned in his assessment order that the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the business of raising loans at concessional rate and extending them at higher rates. The appellant has failed to use the money of the purpose for which it has been raised, and by capitalized interest. The assessee has increased the cost of inventory was the comments of the AO. These views of the AO appear to be reverted and distorted. The appellant company and its parent company are into different businesses like appellant company doing real estate work and parent company is IndiaBulls Real Estate Ltd., a real estate company. Both the interest of the company are to earn profits but within the framework of corporate law and other allied laws. Therefore, I do not support the view of AO and advice AO to always apply fresh case laws of re....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 8. As regards ground no. 2 the assessee has commenced its business in 2006 itself and was filing return since Assessment Year 2007-08. The present assessment year is the fourth year of filing return of income. The CIT(A) held as under: "GROUND NO. 3:- The assessee is real estate developer/builder. The company was incorporated on 25.07.2006. The appellant had filed its income tax return for AY 2007-08 showing total loss of Rs. 32,619/-. The appellant had filed income tax return for AY 2008-09 showing loss of Rs. 64,074/- and also filed ITR for AY 2009-10 showing total loss of Rs. 62,220/-. In the FY 2009-10 i.e. AY 2010-11 which is under appeal, the project cost incurred was to the extent of Rs. 49.52 crs. There is payment of brokerage ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lowed, as the company has not started its activities, is not correct. The AO had relied on the decision of Hon'ble Supreme Court in the case of M/s Tuticorin Alkali Chemicals & Fertilizers Ltd. and had said in its order in page no. 6 that interest earned by the appellant company of Rs. 2,10,97,405/- earned during free commencement period is held as income from other sources by applying the above case law of Hon'ble Supreme Court. The Hon'ble Supreme Court case is different where FDR interest received from fixed deposit in banks was taxed as income from other sources in the preoperational period of the company. In the present case of the real estate builders when the project construction activities are going on, and where in the 4th year....