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2012 (7) TMI 794 - ITAT, AHMEDABADDis allowance of interest paid on capital borrowed for the acquisition of capital assets (WIP) - CIT stated that the assessment order u/s 143(3) should be treated as “erroneous and prejudicial to the interest of the revenue"- Held that:- Undisputed fact that the Assessee had made written submissions both before CIT & AO that though the assessee had made acquisition of assets during the year under consideration but had not borrowed funds for its acquisition and hence the provisions of sec 36(1)(iii) are not applicable and accordingly no part of interest was required to be capitalised the Commissioner did not adequately deal with these contentions, and rejected the same by observing that the interest payment should not have been allowed as a deduction. The A.O. has after considering all the facts and after satisfying himself accepted the contentions of assessee and made no disallowance u/s. 36(1)(iii). CIT has not been able to establish and pin point unequivocally the error or the mistake made by the A.O. which makes the order unsustainable in law as the finding of the CIT must be clear, unambiguous and not debatable - A.O. having exercised his mind over the issue, it cannot be termed as erroneous and prejudicial to the interest of the Revenue - in favour of assessee.
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