TaxTMI 
TaxTMI 
2022 (12) TMI 356
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....2018. The revenue has filed concise grounds of appeal which read as under: 1. The order of the CIT(A) is contrary to law, facts and circumstances of the case. 2. Whether the Id. CIT(A) had erred in deleting the addition made u/s 36(l)(iii) by holding that the land is stock-in-trade, overlooking the rationale of the various case laws relied upon by the assessing officer which were discussed in the assessment order and especially in the wake of recent decision of jurisdictional high court in the case of M/s Mahindra World City Developers Ltd. V. Assistant Commissioner of Income Tax, Company Circle IV(1), Chennai (TCA Nos.245, 247 & 248 of 2019), where it has been held that- "Mere purchase of the land out of the borrowed capital does not ....
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....ctional High Court in the case of CIT vs. Ceebros Hotels (P.) Ltd. (131 Taxmann.com 181; 05.10.2021). The copies of the decisions upon have been placed on record. Having heard rival submissions, our adjudication would be as under. Assessment Proceedings 4.1 The assessee being resident corporate assessee is stated to be engaged in civil construction. The assessee held land of Rs.853.52 Lacs and classified the same as 'current asset'. The assessee paid interest of Rs.944.55 Lacs which led Ld. AO to compute disallowance u/s 36(1)(iii). The Ld. AO held that the assessee did not capitalize any interest on such loans in respect of land classified as 'current asset'. 4.2 Upon perusal of details, it transpired that the variety of land was purch....
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.... be capitalized only in case of 'fixed asset' and not with respect to 'current asset', The assessee submitted that the land form part of stock-in-trade and therefore, any cost incurred in respect thereto would be revenue expenditure. The decision of Hon'ble Bombay High Court in the case of Jayantilal Investments vs. ACIT (96 Taxmann.com 38) was referred to support the same. Concurring with assessee's submissions, Ld. CIT(A) allowed the issue in assessee's favor. Aggrieved, the revenue is in further appeal before us. Our findings and Adjudication 6. From the fact it emerges that the assessee is engaged in civil construction. As part of its business activities, it held various land parcels. The land parcels are held as part of 'current ass....