9911796707
TMI Blog2018 (9) TMI 63X X X X Extracts X X X X X X X X Extracts X X X X ..... anakchand H. Loonkar HUF retired partner of 5,15,05,674/-. The five partners of the firm contributed 5,20,00,000/- and thereafter the loan from the Axis Bank Ltd. was used to pay the money to the partners and to the lenders. The observation of the AO that interest of 1,08,73,997/- has to be apportioned between two buildings i.e. building A and B in the ratio of investment according to which the interest attributable to building A comes to 36,97,159/- and building B 71,76,838/-. We direct the AO to allow the interest of 1,02,37,297/- in the proportion of 34% to building A and 36% to building B. Resultantly, 67,56,616/- is admissible under section 2(b)B and 34,80,681/- is to be treated as business interest be set off against the business income of the assessee. The AO is accordingly directed. - Decided partly in favour of assessee X X X X Extracts X X X X X X X X Extracts X X X X ..... to the AO, assessee has already acquired the property before borrowing money from the Axis Bank Ltd. and therefore asked the assessee to explain as to why the interest is admissible under section 24B of the Act. The assessee submitted that the loan was taken from Axis Bank Ltd. to repay the existing creditors from whom the money was borrowed for the construction of property as under:- Date Particulars Amount Paid 09/10/2009 Loan taken 8,45,00,000 15/10/2009 1 Manju B. Shah 75,00,000 75,00,000 15/10/2009 2 Mahendra Loonkar 1,50,00,000 1,50,00,000 26/11/2009 1,00,00,000 29/12/2009 5,00,000 2,55,00,000 12/11/2009 3 Ramesh S. Shah HUF 73,00,000 26/11/2009 1,00,00,000 29/11/2009 50,00,000 2,23,00,000 26/11/2009 4 Palash B. Shah 1,00,00,000 29/12/2009 25,00,000 1,25,00,000 20/10/2009 5 Ruchira R. Shah 1,67,00,000 1,67,00,000 8,45,00,000 4. The AO observed that assessee has converted unsold stock into investment in Financial Year 2007-08 and also observed that loans appearing as outstanding as on 31.03.2008 were as under: Ramesh S. Shah Family Trust ₹ 69,09,673 Manakchand H. Loonkar HUF Rs.5,15,05,674 Sumercha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7-08 in F.Y. 2005- 06 and 2007-08 which was duly offered to tax converted the remaining into investments which was duly shown as investment in the balance sheet as on 31.03.2008 and the corresponding loans were also shown as outstanding. Thereafter, as on 31.03.2009 the value of investments was shown at ₹ 12,47,74,629/- comprising Sumer Height Building-A ₹ 4,21,16,550/- and Sumer Height Building-B ₹ 8,26,58,079/-. The Ld. A.R. submitted that the assessee let out the commercial wing-B to Axis Bank Ltd. on a monthly rental of ₹ 15 lakhs and also made borrowings to the tune of ₹ 8,45,00,000/-. Since the disbursement of funds from Axis Bank Ltd. took merely 6 months therefore during the intervening period the partners of the firm contributed funds to repay the loan to Manakchand H. Loonkar of ₹ 5,15,05,674/- and thus the disbursement was used to repay the money raised for the construction of the Sumer Heights Building and established the direct nexus between the construction of property which is let out and the borrowing which is made from the Axis Bank Ltd. The Ld. A.R. drew our attention to para No.4 of assessment order wherein the AO has recorded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... offered the same to tax as it was income from business in the F.Y. 2007-08. The assessee converted the unsold stock as investments as on 31.03.2008 which are as under: Investment in Sumer Heights - Building "A" Rs.2,78,76,708/- Investment in Sumer Heights - Building "B" Rs.6,80,07,882/- Rs.9,58,84,590/- The corresponding loan was also shown in the balance sheet as under: 1. Ramesh S. Shah Family Trust ₹ 69,09,673 2. Manakchand H. Loonkar Rs.5,15,05,674 3. Sumerchand H. Shah HUF ₹ 71,77,123 Rs.6,55,92,470 The assessee let out the commercial wing i.e. property B to Axis Bank Ltd. on a monthly rental of ₹ 15 lkahs and also borrowed a sum of ₹ 8,45,00,000/- which was utilised by the assessee to repay the loan creditors which were standing in the balance sheet as under: - Date Particulars Amount Paid 09/10/2009 Loan taken 8,45,00,000 15/10/2009 1 Manju B. Shah 75,00,000 75,00,000 15/10/2009 2 Mahendra Loonkar 1,50,00,000 1,50,00,000 26/11/2009 1,00,00,000 29/12/2009 5,00,000 2,55,00,000 12/11/2009 3 Ramesh S. Shah HUF 73,00,000 26/11/2009 1,00,00,000 29/11/2009 50,00,000 2,23,00,000 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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