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TMI Blog2019 (5) TMI 1708X X X X Extracts X X X X X X X X Extracts X X X X ..... venture. Moreover, while perusal of details of expenses, we have noted that the assessee has claimed depreciation, remuneration to Directors, appeal fees, audit fees, professional fees and telephone expenses. All the expenses were included in the standard deduction claimed by the assessee. In our view, the assessee failed to substantiate the business activities as no details particulars regarding the alleged new business venture undertaken by assessee is furnished. Therefore, we do not find any merit in the ground of appeal raised by assessee. Disallowance of claim of interest under section 24(b) - assessee submits that the assessee purchased a property known as Dhanwatay House - from which date, the assessee is eligible to claim interest on the loan - HELD THAT:- There is no dispute that the agreement for acquisition of part of Dhanwatay House was executed only on 31.03.2008. There is no dispute that during the relevant period that the assessee has offered the rental income of part of Dhanwatay House. The intention of assessee was further to let out the property and to earn the rental income. In our view, when the availing of finance and payment interest thereon is not in dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disallowing the business loss-of ₹ 9,08,549/-. 2. On the facts and the circumstances of the case and in law, the ld. CIT (A) has erred in not allowing claim of Interest u/s. 24 (b) from the date of payment and has allowed it from the date of the agreement. Interest claim has to be allowed from the date of payment and not from the agreement date. We request your Honor to kindly allow the claim of interest from the date of payment. 2. Brief facts of the case are that the assessee is a company and allegedly engaged in the business of leasing out of property, filed its return of income for Assessment Year 2008-09 on 30.09.2018 declaring total income at ₹ 3,22,161/-. The return of income was selected for scrutiny. The Assessing Officer while passing the assessment order besides the other addition/disallowance disallowed the business los of ₹ 9,08,549/- and deduction on interest under section 24(b). On appeal before the ld. CIT(A), both the addition/disallowances were confirmed. Therefore, further aggrieved by the order of ld. CIT(A), the assessee has filed the present appeal before us. 3. We have heard the submission of ld. Au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee has claimed slandered deduction under section 24(a) which covers all the expenses. The Assessing Officer issued show-cause notice to the assessee to substantiate the claim. The assessee filed its reply dated 21.12.2012 stating therein that assessee was intending to develop another property as a business of property development. However, the joint venture was not successful, therefore, the assessee claimed expenses and the head business expenses. The reply of assessee was not accepted by Assessing Officer holding that the claim of assessee is not supported with documentary evidence. The assessee was again asked to furnish the documentary evidence in support of claim. The assessee vide its reply dated 30.01.2013 stated that the new business venture undertaken by assessee was with reference to new project for consideration and sale. The assessee-company is in the real estate business since 1995 and the Director and staff have good knowledge of real estate business. The assessee decided to purchase new plot with intention of making construction on this plots and thereafter, either sale or leased the said unit. In this connection, the assessee incurred expenses. The assessee-compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee submits that the assessee purchased a property known as Dhanwatay House. The acquisition and payments made for acquisition of property was made from borrowed funds are not in dispute, the only question in dispute is from which date, the assessee is eligible to claim interest on the loan. During the period under consideration, the assessee made a payment of ₹ 5.28 Crore to Vedant Property P. Ltd. for acquisition of Dhanwatay House. The assessee purchased the said property vide agreement to sale dated 31.03.2008. The Assessing Officer considered the interest expenses from the date of agreement and not from the date of payment. The date of payment was on 14.02.2008. There is no dispute that the property was purchased / acquired from the borrowed funds and the assessee is entitled for interest from the date of borrowing. The ld. AR of the assessee further submits that the ownership of the property is not a criteria for claiming deduction under section 24(b). 11. On the other hand, the ld. DR for the revenue supported the order of lower authorities. It was submitted that the assessee acquired property on the last date of Financial Year as per agreeme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agreement for acquisition of part of Dhanwatay House was executed only on 31.03.2008. There is no dispute that during the relevant period that the assessee has offered the rental income of part of Dhanwatay House. The intention of assessee was further to let out the property and to earn the rental income. In our view, when the availing of finance and payment interest thereon is not in dispute the assessee is entitled for interest allowance irrespective of fact that finally agreement to sale for change of ownership was executed subsequently. Therefore, in our considered view, the assessee is entitled for proportionate allowance of interest on the payments of ₹ 5.28 Crore paid to Vedant Property Pvt. Ltd. Hence, the Assessing Officer is directed to compute the interest allowance from the date of payment i.e. on 14.02.2008. In the result, this ground of appeal is allowed. 14. In the result, appeal of the assessee is partly allowed. In ITA No. 2859/Mum/2016 for A.Y. 2012-13 15. The assessee has raised the following grounds of appeal: 1. On the facts and the circumstances of the case and in law, the ld. CIT (A)- 10 has e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 62,02,916 Total acquisition cost ₹ 4,97,23,535 Amount received ₹ 4,97,23,535 As such excess received ₹ 0 17. The assessee also submitted that there is no capital gain as capitalization of interest of the said property was duly discussed at the time of assessment proceeding for Assessment Year 2011-12 and there is no change in the current year. The contention of assessee was not accepted by Assessing Officer. The Assessing Officer on the basis of total interest capitalized and calculating the working of total value of property, calculated Short Term Capital Gain of ₹ 61,68,015/- by holding as under: 7.6 It is noticed from the balance sheet that the assessee has capitalized the interest in respect of the investment in property and the entire property of 101.365 Pies was acquired with the borrowed capital therefore, the interest is allowed to be capitalized on proportionate basis. The same is calculated as under; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar 2012-13. No interest was capitalized in Assessment Year 2009-10 and 2020-11 as initially the said acquisition was made from interest free fund, share receipts by interest bearing loan in Assessment Year 2011-12. The only point to dispute between the assessee and Assessing Officer is with regard to the amount of interest capitalized pertaining to the property sold during the year under consideration. The Assessing Officer made disallowance under section 24(b) in respect of loan of ₹ 5.28 Crore, which is not a issue and part of present appeal. The action of Assessing Officer in capitalizing the interest is not proper. The interest capitalized pertains fully and totally in respect of property surrendered during the year and the assessee is entitled for full claim of deduction on such interest. 20. On the other hand, the ld. DR for the revenue supported the order of lower authorities. 21. We have considered the rival submission of the parties and have gone through the orders of authorities below. During the assessment, the Assessing Officer on scrutiny of investment in property, the Assessing Officer noted that there was a difference in investment i ..... 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