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TMI Blog2017 (3) TMI 1713X X X X Extracts X X X X X X X X Extracts X X X X ..... ch has been taken for the first time at this stage, but at the same time it goes to the root of the issue involved because, whence, this interest expenditure is not attributable to ‘income from other sources’, then it indicates that the same may have been for the purpose of construction business/ongoing project. Being a core issue which goes to the determination of correct tax liability of the assessee, we therefore deem fit to admit the additional ground. Since this aspect has neither been contented by the assessee before the AO nor has been examined by the AO, therefore, in the interest of justice, we remit back the matter to the file of the AO, who shall examine the utilization of the borrowed fund for the purpose of business and the nex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot quantified in assessment order). The disallowance made, without prejudice and in the event that ground no 1 and 2 is deleted at appellate proceedings, is unfair and illogical and against natural principle of law and justice. Apart from the above, the assessee has also filed an additional ground of appeal, vide petition dated 13.12.2016, which reads as under:- Alternative, the Learned CIT(A) ought to have directed the AO to allow capitalization of interest expense amounting to ₹ 62,52,905/- (i.e. to include it in Work in progress of the project) in the same manner he directed to capitalize the other expenses like transport charges, professional fees, advertising expenses etc. 2. The brief facts are that the assessee co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iven ICD of ₹ 4 crores to M/s. Radiant Tradevest Private limited, a body corporate at simple interest rate of 12% p.a. The assessee had also debited interest expenses on loan amounting to ₹ 62,52,903/- and contended that it was directly attributable to the earning of interest income of ₹ 48 lakhs. The other cost of expenditures aggregating to ₹ 7,25,051/- were fixed cost and was claimed that it has nothing to do with the existence of any project. The learned CIT(A) noted that out of total expenses debited to the Profit loss account, the major component consists of ₹ 62,52,905/- which is on account of interest expenditure and other expenses aggregating only to ₹ 7,25,051/-. Out of the said expenses, Ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en held to be not relatable to earning of interest income, then it, inter alia, it means that it is for the purpose of on-going project and, hence, such an interest expenditure also needs to be capitalized as done by the CIT (A) with regard to certain other expenses. 5. On the other hand, learned CIT-DR strongly relying upon the order of the CIT (A), submitted that the issue raised in additional ground has not been taken either before the AO or before the ld. CIT (A), albeit, the assessee s case had been that the interest expenditure is attributable to earning interest income of ₹ 48 lakhs and, therefore, the same should be allowed as deduction. If the assessee is claiming that the interest pertained to the project, then the matter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... viii. Office Expenses 500 ix. Professional Tax 2,500 x. Bank Charges 35,123 xi. Interest on delayed payment of taxes 34,140 Total 69,77,957 Out of the aforesaid expenditure, those given at Sr. nos. ii to v have been allowed by the ld. CIT (A) to be capitalized and those at Sr. nos. vi to x have been allowed as revenue expenditure. The item at Sr. no. xi has been disallowed by the assessee itself. The major issue before us is mainly the interest cost, which has been apportione ..... X X X X Extracts X X X X X X X X Extracts X X X X
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