TaxTMI 
TaxTMI 
2022 (2) TMI 385
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....rstated facts, being; a) The Ld. AO had passed the assessment order on conducting proper inquiries on due application of mind and on considering all material facts filed/available on assessment record; b) The Ld. AO had already made the disallowance of huge interest expense of Rs. 7,92,27,335/-, out of total finance cost incurred of Rs. 11,49,54,281/-; c) The Ld. AO had verified the genuineness of loan ICDs supported with hank statements and other documents and on considering the fact that major loans/ICDs had been received from reputed Non-Banking Financial Company (NBFC); 3.0 The order passed u/s. 263 is bad in law since there is no lack of inquiry on pail of Ld. AO and the cases involving inadequate inquiry does not empower the Pr. CIT to invoke the revisionary powers u/s. Sec 263 of the Act. The appellant craves leave to add, amend, alter, and/or withdraw any of the grounds of appeal at time of hearing." 3. The assessee company filed its return of income on 30.09.2015 declaring total loss to the tune of Rs. (-)11,14,50,265/- for the A.Y. 2015-16. The assessment u/s. 143(3) was completed on 30.06.2017 determining total loss at Rs. ....
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....ing reasons:- (i) Large increase of unsecured loans during the year. (ii) High interest expenses as compared to business turnover. 5. The issue has squarely been examined by AO and passed the order dated 30.06.2017, therefore, the reopening is bad in law. The copy of the assessment order dated 30.06.2017 u/s. 143(3) of the Act is on the file in which the interest issue has been examined and for ready reference the para 5 is hereby reproduced as under:- "5. Disallowance u/s. 36: It is observed from the audited P & L a/c, that the assessee company has debited interest expenses of Rs. 11,49,54,281/- on borrowed fund of Rs. 117,35,69,248/- at an average interest rate of 9.80%. Assessee company was required to submit the details with reference to loans taken, utilization of loans and rate of interest. In response to the same, the assessee company submitted the details and stated that the advances had been given to the various projects and also enclosed the working of interest attributable towards the advance and investment account. The list of the persons to whom advances were given as under:- Sr. No. Name, address and particulars of the develop....
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....r King Restaurant 1,00,00,000 9,80,000 Total 80,84,42,190 7,92,27,335 5.1 A perusal of the detailed working submitted by the assessee shows that the interest on borrowed funds attributable to the advances amounts to Rs. 7,92,27,335/and the same was debited in the P & La/c. Section 36 of the Act provides the deduction in respect of capital borrowed for the purpose of business or profession. The logic behind the provisions to 36(1){iii) of the Income Tax Act is only to ensure that whatever interest is capitalized for books of accounts, it remains capitalized for the purpose of Income-tax. This interest cannot be claimed as deduction u/s. 36(1)(iii) of the Income Tax Act. Borrowing cost that are directly attributable to the acquisition, construction or production of a qualifying asset should be capitalized as part of the that cost of a qualifying asset when it is probable that they will result in future economic benefits to the business and the costs can be measured reliably. It can be clearly seen from the details submitted by the assessee that the advances was given to the builders/developers and the same was not for the business of the assessee ....
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....agara Financial Consultants Pvt. Ltd. Asst. Year; 2015-16 PAN -AACCN1918R. In response to notice u/s. 143(2) and under instruction from my abovesaid client, I hereby state as under:- In response to notice u/s. 143(2) and under instruction from my abovesaid client, I hereby state as under:- The assessee is a private limited company engaged in the "business of providing finance to developers and builders, buying and selling in "properties finance related activities and trading in derivatives. The assessee provides the funds to various developers/builders and makes the block booking of flats/shops/offices in their under-construction projects as -a result of which the - assessee is able to acquire the properties at discounted price. Thereafter, on substantial completion of the construction activities, the assessee would sell the properties and earn profit thereon. During impugned year, the assessee filed its return of income vide Ack no. 839031591300915 on 30/09/2015 on disclosing the total Loss of Rs(-)11,14,50,265/-. The other details submitted are stated as under:- 1 I.T. acknowledgement receipt; 2. Computation of income (original); ....