Business Starts Before the Rent Rolls In: Bombay HC Backs Interest Set-off

Modi Business Centre Pvt. Ltd. Vs DCIT (Bombay High Court) Facts- The Assessee, a private limited company incorporated in February 1992, was engaged in constructing and letting out business centres, with an ancillary object of financing under its MoA. During FY 1991-92, the Assessee borrowed ₹9.20 crore from Citibank against equitable mortgage, out of which part was used for capital advances and pre-operative expenses, and the balance was advanced to group companies at interest rates of 21–22.5%. For AY 1992-93, the Assessee declared income of ₹5,966 under “business,” showing inte...