TaxTMI 
TaxTMI 
2018 (8) TMI 2084
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....nder section 143(3) of the Income Tax Act, 1961(hereinafter 'the Act'). 2. The only issue in this appeal of assessee is against the order of CIT(A) confirming the action of the AO in disallowing the interest of Rs. 25,93,056/-. For this assessee has raised the following three grounds: - "1. On the facts and circumstances of the case and in law, the learned 01(A) erred in confirming the action of the AO in assessing the total loss of the company at Rs. 20,576/- as against the returned loss of Rs.26,13,632/-. 2. On the facts and circumstances of the case and in law, the learned CIT(A) erred in confirming the disallowance of net interest of Rs.25,93,056/- debited to the Profit and loss account. 3. On the facts and circumstances of the c....
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....interest expenses of Rs. 25,93,056/- on the ground that the appellant has failed to provide the evidence or supporting document to establish that the huge amount of interest bearing advances had been taken for carrying out the real estate business. The interest expenditure can be allowed as deduction u/s.36(1)(u) of the Act the interest paid is In respect of capital borrowed for the purpose of the business or profession. The appellant has obtained inter corporate deposits and the same has been advanced to other parties. The appellant has failed to provide justification for borrowing the same amounts when there was no need of funds for its business The appellant has obtained to provide any cogent evidence in support of its claim that the fun....
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....d purchase as the assessee is engaged in the business of land development and construction business. The assessee explained that the company through its directors try to find out the suitable land and purchase the same for the purpose of development thereof and trade therein but could not succeed. The amount of loan taken at the interest of 12% was advanced after few months at the rate of 12%. The learned Counsel filed the chart of the parties from whom loans were taken which reads as under: - Name of the parities Amount of loan taken Amount of loan repaid Closing balance Interest Lodha Crown Buildmart Pvt. Ltd 20,00,00,000 20,00,00,000 Macro Tech Construction Private Limited 113,33,33,221 20,00,00,000 93,33,33,2....
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....or profession. There is no quarrel, in the present case, that the money raised on account of issuance of the debentures would be capital borrowed and the debentures were issued for the purpose of the business of the assessee. In such a scenario when the interest was actually incurred by the assessee, which follows the mercantile system of accounting, on the application of this statutory provision, on incurring of such interest, the assessee would be entitled to deduction of full amount in the assessment year in which it is paid. While examining the allowability of deduction of this nature, the AO is to consider the genuineness of business borrowing and that the borrowing was for the purpose of business and not an illusionary and colourable ....