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TMI Blog2022 (4) TMI 962X X X X Extracts X X X X X X X X Extracts X X X X ..... l High Court in Lokhandwala Construction [ 2003 (1) TMI 93 - BOMBAY HIGH COURT] another Co-ordinate Bench of Tribunal dismissed the appeal filed by the Revenue and allowed the claim of deduction under section 36(1)(iii) - Appeal of assessee allowed. - ITA No. 1310/Mum./2021 - - - Dated:- 8-4-2022 - Shri Amarjit Singh, Accountant Member And Shri Sandeep Singh Karhail, Judicial Member For the Assessee : Shri Niraj D. Sheth For the Revenue : Shri T. Shankar, Sr. A.R. CIT ORDER PER SANDEEP SINGH KARHAIL, J.M. The present appeal has been filed by the assessee against the order dated 20 May 2021 passed by the Commissioner of Income Tax (Appeals)-49, Mumbai ( the CIT(A) ) for the assessment year 2014 15. 2. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roup concern and financial institutions. On the said funds, the assessee had paid the interest of ₹ 16.96 crores and after reducing the interest income of ₹ 5.58 crores net interest expenses of ₹ 11.38 crores was shown as expenses. Out of the total interest expenses of ₹ 11.38 crores, the assessee had capitalised an interest of ₹ 5.02 crores to work in progress. Out of the said interest of ₹ 5.02 crores, capitalised in the books of accounts, interest of ₹ 4.35 crores was claimed as deduction in the return of income. Accordingly, during the course of assessment proceedings, the assessee was asked to explain as to why the interest expenses claimed in the return of income should not be disallowed. In r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see, inter-alia, submitted that the issue is covered in favour of the assessee by decision of Hon ble Jurisdictional High Court in case of CIT v/s Lokhandwala Construction Industries Ltd.: [2003] 260 ITR 579. The CIT(A) vide impugned order dated 20 May 2021 held that the aforesaid decision of Hon ble Jurisdictional High Court was on a different issue and thus is not applicable to the present case. The CIT(A) further held that the issue was considered by Special Bench of Tribunal in Wall Street Construction Ltd. (supra) and same is applicable to the facts of the present case. The CIT(A) also held that the fact that in case of Wall Street Construction Ltd. (supra) the assessee was following Project Completion Method whereas the assessee follo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le Bombay High Court in CIT V/s Lokhandwala Construction Ind. Ltd. (260 ITR 0579), decision of Tribunal in M/s. Ashish Builders Private Ltd. (ITA No.310/M/ 2012); Rohan Estates (ITA ITA No.3048/Mum/2019 M/s. National Standard India Private Limited Assessment Year: 2013-14 No.7200/Mum/ 2010) Pune Tribunal in M/s Kolte Patil Developers Ltd. concurred with assessee's submissions and held as under:- 5.7. From the above, it is evident that any amount of the interest paid in respect of capital borrowed for the business purposes constitutes an allowable deduction. The said clause (iii) of section 36(1) of the Act supports the assessee's claim in the present case. This view is upheld in the case of CIT vs Lokhandwala Construction Ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... does not affect the facts of the case of the assessee. In view of the binding judgment of the jurisdictional High Court in the case of Lokhandwala constructions and also of the jurisdictional ITAT in the cases of Ashish Builders Private Ltd and Rohan Estate Private Ltd (supra) and also the various judicial pronouncements relied upon by the assessee, the interest expenditure claimed by the assessee is held to be allowable. Therefore, the AO is directed to delete the addition made of ₹ 4,39,49,000/-. This ground of appeal is ALLOWED. . 5. Upon due consideration of material facts, it is quite evident that the assessee was following percentage of completion method of accounting to recognize revenue from operations as against ..... X X X X Extracts X X X X X X X X Extracts X X X X
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