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TMI Blog2021 (2) TMI 342X X X X Extracts X X X X X X X X Extracts X X X X ..... allowed u/s 36(1)(iii) if the business of the assessee has been commenced. At this point, it is appropriate to note that the assessee is already in the business of medical profession and the assessee is offering income from the said business or profession and now it is not possible to hold that the assessee has not commenced business as it is also the plea of the assessee that depreciation has been granted on the assets purchased out of this loan. In such circumstances, the Assessing Officer has to see only utilization of funds whether the said fund is used for the purpose of business. We deem it fit to examine the claim of the assessee by the Assessing Officer, as such we remit to the file of Assessing Officer for fresh consideration as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n and the assessee not able to prove as to how the loan was utilized. Though the assessee has claimed that the said loan was used for business purpose, the assessee has not furnished any document to support the claim. Accordingly, the Assessing Officer disallowed ₹ 17,86,360 out of ₹ 35,72,717 claimed as interest expenses by the assessee. On appeal, the CIT (Appeals) observed that the assessee has not carried on any business activity in the year under consideration. The interest was on loan obtained for construction of the building and purchase of equipment which is in the nature of capital asset as such they are not put to use. The CIT (Appeals) held that the assessee is not entitled for deduction of interest on such loan. Acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iled by mortgaging the residential property. Further it was submitted that though the Assessing Officer observed that the assessee has not produced any evidence to prove the usage of this fund. Contrary to this finding by the Assessing Officer, the CIT (Appeals) observed that no business activity was started and hence this interest on loan obtained for construction of building and purchase of equipment cannot be allowed as a revenue expenditure. According to the learned Authorised Representative these findings of the Assessing Officer and CIT (Appeals) are contradictory in nature which shall be vacated. On the other hand, the ld. DR contended that it should be treated as capital in nature. Further the ld. DR submitted that the assessee has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utilized by the assessee and whether it was used for the purpose of business, such interest has to be allowed Under Section 36(1)(iii) of the Act if the business of the assessee has been commenced. At this point, it is appropriate to note that the assessee is already in the business of medical profession and the assessee is offering income from the said business or profession and now it is not possible to hold that the assessee has not commenced business as it is also the plea of the assessee that depreciation has been granted on the assets purchased out of this loan. In such circumstances, the Assessing Officer has to see only utilization of funds whether the said fund is used for the purpose of business. We deem it fit to examine the clai ..... X X X X Extracts X X X X X X X X Extracts X X X X
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