2021 (7) TMI 449

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.... erred in directing the AO to re-compute the profit of eligible business deduction by allocating interest expenditure on the basis of turnover of business segments without establishing the nexus of interest expenses with the business carried on each segment. 2. On facts and circumstances of the case, the Ld. CIT(A) has erred in deleting the addition of Rs. 7,60,092/- made by the AO on account of cessation of trade liability as the validity of cheques had expired and the creditors in respect of the said payments had foregone their liability." 3. In ITA No. 7679/Del/2017, following grounds have been raised by the revenue: "1. On the facts and circumstances of the case, the Ld. CIT(A) has erred in directing the AO to re-co....

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....ration fetching lesser rate of interest and requires more funding that the loans against property, which are loans at a higher rate of interest and comparatively lesser period. 4.4 The Ld. AR has contended that the loans in both business segments i.e. housing loans and loans against property, [income not entitled to claim deduction u/s. 36(1)(viii)] are of same duration and the rate of interest charge is almost similar. It is stated that the company maintains separate accounts of income from housing loans and loan against property. The Ld. AR has further stated that ledger accounts were filed before the AO during assessment and it was submitted that the company apportions common expenses such as salary, depreciation, rent, advertis....

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.... acceptable method for determining the profits from eligible business would be allocation of interest expenditure on the basis of turnover of the eligible and ineligible business segments. The AO is directed to recompute the profit of eligible business deduction by allocating interest expenditure on the basis of turnover and not on the basis of balance of outstanding housing loan and loan against property recoverable at the end of the year as apportioned by the appellant company. The deduction u/s. 36(1)(viii) i.e. 20% shall be allowed on such profits and gains of the eligible business arrived after apportionment of the interest expenditure on the basis of turnover ratio of the two segments. This ground of appeal is disposed off accordingly....