Case Law Details
Idea Estate Pvt. Ltd. Vs DCIT (ITAT Delhi)
In regard to ground of disallowance of interest of loan taken for advance given for project and treating it as capital expenditure it can be observed that the assessee has claimed that it had advanced for Bangalore Project and Gurgaon Project and the loan interest amounting to Rs. 5351806/- was paid towards advance given for the project. The ld CIT(A) observed that the expenditure on interest requires to be capitalized to the expenditure on the said project and is not allowable as revenue expenditure. There appears to be no error in the findings as a matter on record suggests that the assessee company had entered into collaboration agreement for development of land and primarily the company was earning rental income. Thus, the interest paid for upcoming projects which was used to be rental has been rightly capitalized. There is no error in the findings of the ld CIT(A), thus, the ground is not sustainable.
FULL TEXT OF THE ORDER OF ITAT DELHI
1. The present appeal has been preferred by the Assessee against the order dated 07.01.2019 of Ld. CIT(A)-4, New Delhi (hereinafter referred as Ld. First Appellate Authority) arising out of an appeal before it against the assessment order dated 25.12.2017 passed u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred as „the Act‟) by the AO, Dy. CIT, Circle-12(1), New Delhi (hereinafter referred as the Ld. AO).
2. The assessee is a company incorporated under the Companies Act, 1956 and engaged in the business of Real Estate Developer & Promoters, Trading, construction and letting out various properties on lease/rental basis. The assessee filed its return on 29.09.15 declaring an income of Rs. 1,01,11,179/- comprising of income from business and profession and income from house property. The return was processed and the case was picked up for scrutiny under CASS and notice u/s 143(2) was served upon the appellant alongwith questionnaire. The Authorized Representative of the assessee company attended the proceeding and filed the details called for. The assessment was completed on disallowing the business loss of Rs. 1,12,49,102/- against the rental income on the ground that there was no business receipts/business activity during the period under assessment. Aggrieved by the order of Ld. Deputy Commissioner of Income Tax, Circle 12(1) the Appellant went into appeal before the Hon‟ble Commissioner of Income Tax (Appeals)-4 New Delhi who allowed the interest expenses amounting to Rs. 40,91,116/- incurred towards acquisition of property at Janpath New Delhi u/s 24(b) of the Act alongwith bank charges, interest on car loan, depreciation expense, director remuneration, audit fees, fees rates and taxes and vehicle running and maintenance, however disallowed the TDS written off on rent which was earlier allowed by assessing officer and interest and penalty on late deposit of service tax. The interest on loan taken for advance given for project amounting to Rs. 53,51,806/- was also disallowed treating it as capital expenditure. Aggrieved by the Appellate order u/s 250(6) and grounds of decision. That the appellant has preferred an appeal before us raising following grounds of appeal:-
Please become a Premium member. If you are already a Premium member, login here to access the full content.
