Pankaj Shukla Vs ITO (ITAT Delhi)
Summary: This appeal was filed by the assessee against the order of the Commissioner of Income Tax (Appeal)-2, Gurgaon dated 30.10.2019 for assessment year 2016-17. The solitary issue raised in the appeal concerned disallowance of interest expenditure of Rs.3,11,520/-.
The assessee was engaged in the business of manufacturing, trading and export of woolen carpets and enjoyed credit limits from the bank on which interest was paid. During the relevant period, the assessee made investments for acquiring properties, including payment for purchase of a flat to Lilac Infracon P. Ltd. and payment of advance for booking a flat with Panorma.
Before the Tribunal, the assessee submitted that the payment relating to Lilac Infracon Pvt. Ltd. included a home loan of Rs.1,14,51,369.40 obtained from ICICI Bank, out of which Rs.83,65,852.00 was paid from the ICICI Loan Account. Interest of Rs.85,517.40 charged by ICICI Bank was also debited to the party account and was not debited to the Interest Account claimed in the Profit and Loss Account. A further amount of Rs.30,00,000.00 was stated to have been paid out of own funds.
In respect of Panorama, Mumbai, the assessee submitted that Rs.27,36,000.00 was paid as booking advance for a flat out of own funds. The assessee contended that the interest expenditure of Rs.3,11,520/- claimed in the P&L account related to credit facilities utilised wholly and exclusively for business purposes and did not relate to the property investments.
