2021 (11) TMI 313

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..... In ITA No. 6147/Del/2017, following grounds have been raised by the Revenue: "1. Ld. CIT(A) erred on facts and in law in deleting disallowance of deduction claimed u/s. 24(b) of the Income Tax Act, 1961 on account of interest amounting to Rs. 6,40,00,000/- incurred on outstanding purchase consideration to acquire the properties of real estate division of M/s. Ballarpur Industries Ltd. on its demerger. 2. Ld. CIT(A) has failed to appreciate the facts brought on records by the AO that the value of impugned properties nowhere mentioned to be constructed or acquired out of borrowed fund and secondly no fund was borrowed by the assessee to acquire or construct the impugned properties, so interest incurred on outstanding purchase considerat....

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....e from house property". The Assessing Officer disallowed the interest paid by the assessee to BIL on the grounds that the unpaid purchase amount has not been paid even after so many years of transactions in the amalgamation scheme never envisaged the non-payment of purchase price perpetually. The AO held that this is a convoluted scheme by the assessee to resort to the deduction u/s. 24(b). 5. The ld. CIT(A) disagreed with the observation of the Assessing Officer and held that interest on unpaid amount to the seller is akin to interest on borrowed capital and since it is an interest on borrowed capital, the assessee is eligible for deduction u/s. 24(b) of the Act. The ld. CIT(A) also held that the deduction was allowed by the Revenue in th....