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TMI Blog2023 (10) TMI 203X X X X Extracts X X X X X X X X Extracts X X X X ..... gh, there is no revenue generated from the said new asset. It is well settle principles of law by the decisions of various courts that set up of business and commencement of business are two separate events. If a business has been set up, even it has not commenced its activities, then expenditure relatable to said business, including interest expenses, if any, should be allowed as deduction. In the present case, AO never disputed the fact that new asset was ready for use in the business of the assessee and also put to use in the business of the assessee. AO disallowed the interest only on the ground that booking has been started in new mandapam from financial year 2016-17 onwards. Date of inauguration and date of booking of hall i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owance u/s 36(1)(iii) of the Act, and the provisions have been invoked and applied in an erroneous manner. 3. The Learned Commissioner of Income Tax, Appeals has also grossly erred in not appreciating that the new mandapam, representing a different though identical business/vertical, would not amount to extension of the existing business to invoke sec. 36(1)(iii), and hence the addition is erroneous and arbitrary. 4. The Learned Commissioner of Income Tax, Appeals , has also erred In not appreciating that there was total unity of control and interlacing of capital. 5. The Learned Commissioner of Income Tax, Appeals, has also erred in not appreciating that the expenditure also qualifies for consideration on the grounds of comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng aggrieved by the assessment order, the assessee preferred an appeal before the CIT(A). Before the CIT(A), the assessee has filed detailed written submissions on issues which has been extracted at para 6.3 on page 6 to 12 of the learned CIT(A) order. The sum substance of the arguments of the assessee before the learned CIT(A) are that when business of the assessee has been commenced and the assessee has acquired new asset for expansion of existing business in the same line of business, then interest paid on borrowed capital is to be allowed as deduction. The learned CIT(A), after considering the submissions of the assessee and also taken note of certain judicial precedents opined that as per provisions of section 36(1)(iii) and proviso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of an asset for extension of existing business or profession for any period beginning from the date on which capital was borrowed for acquisition of asset, till the date on which such asset was put to use shall not be allowed as deduction. Since, new asset was not put to use in business of the assessee, interest paid on capital borrowed for acquisition of said asset needs to be disallowed. The Assessing Officer, after considering relevant facts has rightly disallowed interest paid on loans. 7. We have heard both the parties, perused material available on record and gone through orders of the authorities below. The factual matrix of impugned dispute are that the assessee firm is in the business of running mandapam and marriage halls. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, including interest expenses, if any, should be allowed as deduction. In the present case, the Assessing Officer never disputed the fact that new asset was ready for use in the business of the assessee and also put to use in the business of the assessee. But, the Assessing Officer disallowed the interest only on the ground that booking has been started in new mandapam from financial year 2016-17 onwards. In our considered view, date of inauguration and date of booking of hall is not relevant to decide whether business has been set up or not. The moment, the assessee has kept its asset for ready to use in the business, it can be said that business has been set up. Therefore, we are of the considered view that in the given facts and circums ..... X X X X Extracts X X X X X X X X Extracts X X X X
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