Case Law Details
ITO Vs Logix Buildtech Private Limited (ITAT Delhi)
ITAT held that Penal interest arises out of default in payment of installment / lease rent as per the schedule agreed and the normal interest along with penal interest compounded half yearly was agreed to be paid on the default amount and for the default period as an exception, otherwise the ordinary outcome of default was a cancellation of allotment. Thus, the ld. CIT(A) was correct in observations that this interest is not payable on account of any offences or any prohibition in law or any infraction of law but relates to delay in payment of the lease amount as per the agreement.
Further, the Bench is of considered view that the once the assessee has capitalized all the expenses in regard to work in progress, no distinction can be made between ordinary interest and penal interest for the purpose of capitalization. Thus, there is no merit in the grounds raised by revenue.
FULL TEXT OF THE ORDER OF ITAT DELHI
The appeal has been filed by the Revenue against order dated 26.11.2018 passed in appeal no. Del/CIT(A)-5/0257/2017-18 for assessment year 2015-16 by Commissioner of Income Tax (Appeals)-5, New Delhi (hereinafter referred to as the First Appellate Authority in short ‘Ld. F.A.A.’) in regard to the appeal before it arising out of assessment order dated 29.12.2017 u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) passed by ITO, Ward-15(3), Delhi.
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