TaxTMI 
TaxTMI 
2020 (11) TMI 212
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....ner of Income Tax (Appeals)-24. Mumbai has erred in confirming the addition/disallowance made by the Dy. Commissioner of income Tax 15(2) (2) of interest on loans taken from director wholly and exclusively for the purpose of business activities amounting to Rs. 60,23,999/- and also disallowance of interest paid oil TDS amounting to Rs. 12,380/-. 2. The learned Commissioner of Income Tax (Appeals) has failed to consider the decision of the I Ion. Delhi High Court that in the case of Commissioner of Income Tax Vs. Dhoomketu Builders and Development Pvt. Ltd. reported in (2014) 368 ITR 680 (Delhi) wherein it has been that in the case of real estate company, the business can be said to have been commenced on acquisition of land, since ....
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....iculture, sericulture, horticulture, aquaculture. The assessee took the loan from the Director in sum of Rs. 48,98,014/- and paid the interest in sum of Rs. 29,62,917/- and also took the inter Corporate Deposits in sum of Rs. 6,30,00,000/- and paid the interest in sum of Rs. 30,61,082/-. The total interest was paid in sum of Rs. 60,23,999/-. The said interest was disallowed and the AO raised the addition in sum of Rs. 60,23,999/-. The interest on TDS claimed in sum of Rs. 12,380/- which was also disallowed and added to the income of the assessee. The total income of the assessee was assessed to the tune of Rs. (-)53,201/-. Feeling aggrieved, the assessee filed an appeal before the CIT(A) who dismissed the appeal of the assessee, therefore, ....
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....pany purchased some immovable properties, being land and flat, for undertaking of business of real estate. According to the 'Memorandum of Association', one of the main objects of the company was to carry on business in real estate. The assessee claimed deduction u/s. 36(1)(iii) as interest on borrowed capital which was disallowed by the AO. The Tribunal rejected the claim on the basis that the business in real estate had not commenced and that it was the capital expense that was shown as advance against the immovable property. In appeal by the assessee, the Hon'ble High Court held that: "In the instant case, according to the Memorandum of Association, one of the main objects of the company was to carry on the business ....
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....enditure is not confined to expenses incurred on revenue account. Capital expenditure may not be allowed as a deduction under section 37 because the section specifically bars any deduction of expenditure of capital nature. But section 36 is differently worded. There is no bar in section 36(1)(iii) to allowance of interest paid in respect of capital borrowed, which has been utilized for purchase of capital assets." In the case of Dhoomketu Builders & Development (P.) Ltd. (supra), it is held that "acts of applying for participation in tender, borrowing of fund on interest from holding company and deposit of borrowed monies on same day as earnest money clearly establish that business had been set up by assessee in relevant year". ....
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....- outstanding as at 31.03.2011. The interest was paid on the above loan @ 10%. The borrowing had been effected for the purpose of business activities of the company. The assessee has rightly claimed u/s. 36(1)(iii) interest paid on the above loan during the impugned assessment year of Rs. 52,88,800/-. The above claim of the assessee is supported by the ratio laid down in the decisions mentioned above. In view of the above, we delete the addition of Rs. 52,88,800/- made by the AO." 5. The facts are not distinguishable at this stage. The issue has duly been covered by the assessee's own case for the A.Y. 2012-13 in ITA. No. 2249/M/2018 dated 29.07.2019, therefore, by honoring the decision of the Hon'ble ITAT, we set aside ....