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TMI Blog2016 (6) TMI 484X X X X Extracts X X X X X X X X Extracts X X X X ..... rpose of business of the assessee. In our considered view, as advance was given for the purpose of business, no disallowance can be made under section 36(1)(iii) of the Act. - Decided in favour of assessee. - ITA No. 6581/Del/2013 - - - Dated:- 18-5-2016 - Shri H. S. Sidhu, Judicial Member And Shri J. Sudhakar Reddy, Accountant Member For the Appellant : Dr. Rakesh Gupta and Shri Somil Aggarwal, Advs For the Respondent : Sh. P. Dam Kanunjna, Sr. D.R. ORDER Per J. Sudhakar Reddy, Accountant Member This is an appeal filed by the assessee against the order of the Ld.Commissioner of Income Tax (Appeals)-II, Faridabad dated 12.11.2013 pertaining to the Assessment Year (hereinafter referred to as the A.Y.) 2009- 10. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t year as the project did not materialize. The A.O. relied on the findings in the earlier A.Y. on the very same issue and disallowed this claim of the assessee. He held that the advance given to M/s SRS Real Estate Ltd. on various dates was for the purpose of purchase of capital asset in the form of proposed commercial complex. The A.O. was of the view that the assessee has utilized borrowed funds, from its mixed funds available, for the purpose of making these advance payments. He gave a factual finding that the net liquidity position of the assessee on the date of payment, excluding FDR s, is negative. However he accepted the claim of the assessee for set off of interest income, on the ground that the same source of funds which have been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccepted similar disallowance in the earlier A.Y. He submitted that the advance was given for purchase of a capital asset and hence the expenditure is not allowable as revenue expenditure. He relied on the order of the A.O. as well as the Ld.CIT(Appeals) and submitted that the assessee has failed to prove that the borrowed funds were not utilised for these advances. 6. Rival contentions heard. On a careful consideration of the facts and circumstances of the case and a perusal of the papers on record and the orders of the authorities below as well as case laws cited we hold as follows. 7. Undisputedly the fact is that the assessee is the business of Mall cum Multiplex Activities, running of departmental stores, Food Court, retail chain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st paid in respect of borrowed capital utilized for the purposes of the business. The proviso to S.36(1)(iii) as applicable to the impugned assessment year mandated disallowance of interest paid for acquisition of the asset only when the same is for the extension of the existing business of the assessee. The wording for extension of existing business or profession was omitted by the Finance Act, 2015 with effect from 2015-2016. 7.2. In our considered view, as advance was given for the purpose of business, no disallowance can be made under section 36(1)(iii) of the Act. 7.3. Further the A.O. has not demonstrated as to how he has come to a conclusion that the borrowed funds have been utilised for the purpose of making these advances ..... X X X X Extracts X X X X X X X X Extracts X X X X
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