2024 (6) TMI 217

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....e order 12.12.2018 passed under Section 143(3) of Income-Tax Act, 1961 (hereinafter referred as 'the Act') by the ACIT, Circle-5(1), New Delhi (hereinafter referred as the Ld. AO). 2. The return of assessee was selected for scrutiny assessment. Learned Assessing Officer had examined legal and professional expenses paid by the assessee for acquisition of shares of M/s. Marche Retail Private Ltd. and learned Assessing Officer disallowed the same observing that the assessee has shown income from trading and shares and securities and rental income, however, the objects of the company do not show such activities as business objects. Thus, expenses incurred for professional services for purchase of shares of another company was disallowed and le....

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....arned CIT(A) erred in confirming the action of the A.O in disallowing interest expenses of Rs. 76,95,243/- on loan against property. 2.2 That without prejudice to the generality of grounds of appeal no.2.1 above, the disallowance of Rs. 76,95,243/- is arbitrary and highly expensive. 4. Heard and perused the record. 4.1 In regard to ground no.1, it comes up that the case of assessee is that it had decided to purchase 4,000 shares of M/s. Marche Retail Pvt. Ltd. which was also engaged in running of chain of gourmet food retail source and had business interest similar to assessee. Thus, for the purpose of conducting due diligence and feasibility of acquisition, valuation report of this company was got prepared from M/s. Grand Thornton Indi....

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.... which the assessee should have taken under the circumstances. It is not permissible in law, as the Tribunal has done, to bring in suppositions and then to find out whether the claim is allowable or not". 4.3 Further, Hon'ble Karnataka High Court in the case of CIT vs. Karnataka State Industrial & Investment Development Corporation - 163 Income Tax Return 657 (Kar.) held that expenditure in preparation of the object and feasibility report is revenue expenditure. Similar is the view of Hon'ble Gujarat High Court in Principal CIT vs. V. Sintex Industrial Ltd. - 403 Income Tax Return 418 (Guj.). Thus, we are inclined to allow this ground. 5. Ground Nos. 2.1 & 2.2 are taken up together and are based on common set of facts and law. It ....