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TMI Blog2015 (12) TMI 1224X X X X Extracts X X X X X X X X Extracts X X X X ..... tension of building because it is admitted fact that the Assessee has not constructed or added some new rooms or restaurants or some other new facility and even otherwise the Ld. A.O. has not disputed the nature of work undertaken or has made any case that any new facility has been constructed, there fore the work carried by the Assesses can not be treated as extension of existing business. Contention of Ld D.R that the work carried out by the Assessee was certainly in the nature of extension of business because the value of business and property would be increased and it amounts to capital expenditure having no essence and not tenable under the facts and circumstances as demonstrated and evident. There fore, taking all facts and circumstan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of running a hotel. During the year under consideration the assessee started major renovation of the hotel building and incurred an expense of ₹ 1,85,75,761/-. From the balance-sheet it was shown that the assessee took fresh unsecured loans from M/s. Devanshi Consultants Pvt. Ltd. as on 31.03.2008 to the tune of ₹ 2,50,00,000/- (loan ₹ 1,50,00,000/- and as on 31.03.2008 was amounting to ₹ 4,00,00,000/-). The solitary issue arising from the same relates to the addition of ₹ 17,45,918/- made by the Assessing officer, on account of loans received by the assessee treating the same as inclusion for acquisition of an asset for the purpose of extension of its business. On the basis of the above observations, the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re capital work in progress was carried out by utilising the fresh loan accepted during the year. The total interest incurred on such loan amounted to ₹ 19,70,630/-. He further observed that except the interest amounting to ₹ 2,24,712/- payable to M/s. Devansh Consultants Pvt. Ltd. The balance interest of ₹ 17,45,918/- was paid/payable on fresh loans taken during the year. He sought an explanation from the appellant that why such interest should not be disallowed as per the proviso to sec.36(1)(iii) of the I.T. Act. 1961. In reply the appellant made a detailed submission which has been stated in the paragraph 7 of the submission of the appellant. Here the appellant has stated that they have not acquired any asset for exten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such replacements are for the smooth conduct of It he existing business and not for the extension of the existing business. Had there been addition of some new rooms or restaurants or some other new facility then it could have been treated as extension of existing business. The A.O. has not disputed the nature of work undertaken or has made any case that any new facility has been constructed. Therefore, taking all facts and circumstances into consideration, I am of the opinion that the work undertaken by the appellant does not include acquisition of an asset for the purpose of extension of its business. Therefore , proviso to sec.36(1)(iii) is not applicable in this case and the addition is not justified. The A.O. is directed to delete the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ld. CIT(A) passed an reasoned order therefore liable to be affirmed.0020 Order with Reasons 5. We have heard the arguments of both sides and also perused the relevant material available on record. The ld. Addl. CIT (D.R.) for the Revenue has contended that some of the findings recorded by the ld. CIT (Appeals) in his impugned order are not correct, inasmuch as, interest income in the hands of the concerned creditor had accrued as assumed by him but the same was not actually received by the party, We nd that Ld A.O. erred in interpreting that there has been an extension of the existing business and considered the explanation of the appellant as unsatisfactory and with this interpretation disallowed the interest amount. find that Ld A. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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