AI Drafter 
TaxTMI 
TaxTMI 
2023 (2) TMI 1071
X X X X Extracts X X X X
X X X X Extracts X X X X
....ncurred by the assessee for purchase of land at Pali has to be capitalized as 'work-in-progress' (WIP for short). The Revenue has also challenged the deletion of the interest paid on borrowings of Rs.2,15,30,797/- for investments in equity shares and assessed under the head 'short term capital gain' (STCG for short). 4. The brief facts are that the assessee company is engaged in the business of real estate and has filed its return of income for the impugned year dated 20.09.2014, declaring total loss of Rs.4,22,62,577/-. The assessee's case was selected for scrutiny and the assessment order u/s. 143(3) of the Act was passed on 30.11.2016, determining the total income at Rs.3,45,18,220/-, by making various additions/disallowances. 5. The assessee challenged the said order before the ld. CIT(A) who deleted the said disallowance on the ground that the issue was already dealt with by the tribunal in assessee's case for A.Y. 2013-14 in favour of the assessee and also by relying on the other decisions. 6. The Revenue is in appeal before us as against the order of the ld. CIT(A), deleting the impugned additions made by the Assessing Officer (A.O. for short). 7. Ground no.1 - T....
X X X X Extracts X X X X
X X X X Extracts X X X X
....interest capitalized in A.Y. 2013-14, amounting to Rs.74,08,219/- and the interest capitalized for the impugned year, amounting to Rs.5,52,50,000/-. It is pertinent to point out that the Tribunal in A.Y. 2013-14 has allowed the interest claimed by the assessee, amounting to Rs.74,08,219/- on the ground that the order u/s. 263 of the Act passed by the Pr. CIT was itself quashed. The Tribunal has also held that the main objective of the assessee as per its MOA was that the assessee was engaged in the business of real estate and infrastructure development and buying and selling of land was exclusively for the purpose of the business activity of the assessee. The Tribunal has also not disputed the fact that the assessee's ledger account reflects that the assessee had made payment of interest to India Bull for the purpose of purchase of land and has also evidenced that the assessee had entered into an agreement for sale of the said land to Americorp for which it had received advances. It is also observed from the said decision that the assessee had taken loan from India Bulls to repay the agreement amount to Americorp pursuant to the termination of the sale agreement. The Tribunal there....
X X X X Extracts X X X X
X X X X Extracts X X X X
....as irrelevant to consider the purpose for which the loan was obtained. In the present case, the assessee was a builder. In the present case, the assessee had undertaken the Project of construction of flats under the Kandivali Project. Therefore, the loan was for obtaining stock-in-trade. That, the Kandivali Project constituted the stock-in-trade of the assessee. That, the Project did not constitute a fixed asset of the assessee. In this case, we are concerned with deduction under Section 36(1)(iii). Since the assessee had received loan for obtaining stock-in-trade (Kandivali Project), the assessee was entitled to deduction under Section 36(1)(iii) of the Act. That, while adjudicating the claim for deduction under Section 36(1)(iii) of the Act, the nature of the expense - whether the expense was on capital account or revenue account -was irrelevant as the Section itself says that interest paid by the assessee on the capital borrowed by the assessee was an item of deduction. That, the utilization of the capital was irrelevant for the purposes of adjudicating the claim for deduction under Section 36(1)(iii) of the Act (See judgment of the Bombay High Court in the case of Calico Dyeing....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... is not allowable, as it does not pertain to acquisition of the asset. The A.O. also held that the same cannot be allowed for the fact that the cost of acquisition of an asset is incurred at the time of acquiring the asset and the subsequent expenditure incurred cannot be construed as cost of acquisition. The assessee's claim u/s.48(ii) was also not allowed by the A.O. 15. The ld. CIT(A), on the other hand, held that the assessee can capitalize the impugned interest as part of cost of acquisition u/s. 48 of the Act which is to be allowed as deduction against the STCG on transfer of shares. The ld. CIT(A) deleted the said disallowance of interest expenses by relying on the decision of the co-ordinate bench in the case of DCIT vs. Shri Fritz D. Silva in ITA No. 236/Mum/2010 vide order dated 08.05.2015 for A.Y. 2005-06 and the decision of Hon'ble Delhi High Court in the case of CIT vs. Mithilesh Kumari 92 ITR 09 (Del). 16. Having heard the rival submissions and perused the materials on record. It is observed that the A.O. has disallowed the claim of the assessee towards interest expenses paid for short term borrowings for the reason that the expenditure incurred subsequent to th....