Sameer Suneja v. ACIT - Taxpublishers.in

SUBSCRIBE FOR FULL CONTENT

The Tax Publishers2019 TaxPub(DT) 4511 (Del-Trib) : (2019) 178 ITD 0498 : (2019) 202 TTJ 0404

INCOME TAX ACT, 1961

Section 36(1)(iii)

Since assessee had invested borrowed money along with his own funds in various office properties in order to extend its business but the same was never put to use during the year under assessment, no deduction is allowable, therefore, CIT(A) had validly extended the part relief to assessee by way of disallowance of interest on pro-rata basis and remaining amount was required to be disallowed under the proviso to section 36(1)(iii).

Business deduction under section 36(1)(iii) - Assessee claimed interest expenditure on account of interest paid to bank which was utilized for booking of several office spaces - Allowability -

Assessee was engaged in providing financial and management consultancy. From the profit & loss account, AO noticed that assessee had claimed interest expenditure on account of interest paid to bank on loan taken from Bank, which was utilized for booking of several office spaces shown in his investment details. AO invoked the proviso to section 36(1)(iii) and disallowed the interest under section 36(1)(iii). CIT(A) restricted the addition made by AO by partly allowing the appeal. Held: Assessee had invested borrowed money along with his own funds in various office properties in order to extend its business but the same was never put to use during the year under assessment, no deduction is allowable. Section 36(1)(iii) does not speak about immovable properties rather speaks of assets only is also not sustainable because assessee could not be allowed to blow hot and cold in the same breath as assessee had tried to prove on record that he has invested the borrowed money for extension of the office, i.e., office space which are certainly an immovable property but the same was never put to use for business purpose. CIT(A) had validly extended the part relief to assessee by way of disallowance of interest on pro-rata basis and remaining amount was required to be disallowed under the proviso to section 36(1)(iii).

Relied:CIT, Jalandhar-I, Jalandhar v. M/s. Max India Limited (2016) 388 ITR 81 (P&H) : 2018 TaxPub(DT) 5528 (P&H-HC) The CIT, The Dy. CIT v. M/s. Microlabs Ltd. (2016) 383 ITR 490 (Karn) : 2016 TaxPub(DT) 2372 (Karn-HC) HDFC Bank Ltd. v. The Dy. CIT-2 (3), Mumbai & Others (2016) 383 ITR 529 (Bom) : 2016 TaxPub(DT) 1316 (Bom-HC) CIT-II v. Modi Rubber Ltd. (2015) 378 ITR 128 (Del) : 2015 TaxPub(DT) 4361 (Del-HC)

REFERRED :

FAVOUR : Against the assessee

A.Y. :

IN THE ITAT, DELHI BENCH