2018 (1) TMI 1588

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.... facts and circumstances of the case in law, the Ld. CIT(A) erred in allowing capitalization of interest expenses of Rs. 2,94,31,532/- without allowing opportunity to AO and  without verifying that the loan has been taken to invest in capital asset. 2. Without prejudice to above, the Ld. CIT(A) failed to appreciate the fact that rate of interest claimed is also exorbitant i.e.@32% p.a. which was not for the purpose of business. 3. The appellant prays that the order of CIT(A) on the above ground be set aside and that of the assessing officer is restored.   The assessment for impugned AY was framed u/s 143(3) by Ld. Deputy Commissioner of Income Tax Officer-10(3), Mumbai [AO] on 10/01/2014.   2.1&nb....

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....ing the year under consideration since there was no sale. Ground No.4 is a without prejudice statement seeking capitalization of interest expenses and allowance of small administration expenses for running the company. Ld. AO observed that the appellant was stated to be involved in trading of flats and during the year under consideration had shown NIL sales and NIL stock-in-trade at year end against which expenses of Rs. 2,94,73,439/- were claimed in the Profit and Loss account which included finance expenses of Rs. 2,94,31,532/-. He found that the appellant had shown Rs. 13.20 crore as advance for purchase of flat under the head 'current assets.'  It was further observed that the funding for purchase of flats was received from two com....

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....commenced once the flats were purchased and payments were made. It was further submitted that for carrying out the said business activity, the appellant had borrowed funds and utilized the same for purchase of flats, a fact which has not been controverted by Ld. AO. I also find that the appellant has raised Ground No.4 which is a 'without prejudice' ground by stating that even if for any reason the purchases of flats was not considered as its business activity, in that case, the interest expenses incurred towards the same amounting to Rs. 2,94,31,532/- ought to have been capitalized and the balance expenses allowed as deduction in the nature of maintenance of status as a company. On appreciation of the entire facts, whereas I find that the ....