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TMI Blog2024 (6) TMI 217X X X X Extracts X X X X X X X X Extracts X X X X ..... legal and professional expenses have been solely undertaken to solicit help for acquiring capital assets and to treat it as capital expenditure. The reliance placed by learned AR on the judgment of Om Prakash Behl [ 1979 (9) TMI 16 - PUNJAB AND HARYANA HIGH COURT] is relevant wherein held that whether the claim in question is permissible under the provisions of Section 37 of the Act, we have to take the facts as they are. It is not open in law to investigate the motive of the assessee. We are concerned with the actual action on the part of the assessee and not the action which the assessee should have taken under the circumstances. It is not permissible in law, as the Tribunal has done, to bring in suppositions and then to find out whether ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red as Ld. First Appellate Authority or in short Ld. FAA ) in Appeal No. 10212/18- 19 arising out of an appeal before it against the order 12.12.2018 passed under Section 143(3) of Income-Tax Act, 1961 (hereinafter referred as the Act ) by the ACIT, Circle-5(1), New Delhi (hereinafter referred as the Ld. AO). 2. The return of assessee was selected for scrutiny assessment. Learned Assessing Officer had examined legal and professional expenses paid by the assessee for acquisition of shares of M/s. Marche Retail Private Ltd. and learned Assessing Officer disallowed the same observing that the assessee has shown income from trading and shares and securities and rental income, however, the objects of the company do not show such activities as bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es for acquisition of M/s. Marche Retail Pvt. Ltd. 2.1 That on the facts and in the circumstances of the case, the learned CIT(A) erred in confirming the action of the A.O in disallowing interest expenses of Rs. 76,95,243/- on loan against property. 2.2 That without prejudice to the generality of grounds of appeal no.2.1 above, the disallowance of Rs. 76,95,243/- is arbitrary and highly expensive. 4. Heard and perused the record. 4.1 In regard to ground no.1, it comes up that the case of assessee is that it had decided to purchase 4,000 shares of M/s. Marche Retail Pvt. Ltd. which was also engaged in running of chain of gourmet food retail source and had business interest similar to assessee. Thus, for the purpose of conducting due diligenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ive of the assessee. We are concerned with the actual action on the part of the assessee and not the action which the assessee should have taken under the circumstances. It is not permissible in law, as the Tribunal has done, to bring in suppositions and then to find out whether the claim is allowable or not . 4.3 Further, Hon'ble Karnataka High Court in the case of CIT vs. Karnataka State Industrial Investment Development Corporation 163 Income Tax Return 657 (Kar.) held that expenditure in preparation of the object and feasibility report is revenue expenditure. Similar is the view of Hon'ble Gujarat High Court in Principal CIT vs. V. Sintex Industrial Ltd. 403 Income Tax Return 418 (Guj.). Thus, we are inclined to allow this groun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ries. Learned Assessing Officer contrary to the observations to lack of evidences, as made by learned Commissioner (Appeals) mentioned in the assessment order that copy of loan documents, and interest paid ledger was perused at the time of assessment. 8. We are of the considered view that learned tax authorities had fallen in error in not taking into account the fact that investment of securities was one of the objects of the incorporation of the company. The rental income during the year was 3.09 crores, and the income from trading in securities was Rs. 100.36 crores. The loan taken against the mortgaged properties was used for the business purposes of the assessee for the purpose of trading securities. The same was allowable expense in th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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