M/S. RMZ HOTELS PRIVATE LIMITED,BANGALORE vs. NATIONAL E-ASSESSMENT CENTRE, DELHI

ITA 954/BANG/2022Status: DisposedITAT Bangalore22 February 2023AY 2018-1979 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that interest paid on borrowed capital used for business purposes, including investments in shares of another company in a similar line of activity, is deductible under Section 36(1)(iii). It also held that legal and professional charges incurred for such business activities are allowable expenses.

What were the facts?

The assessee, RMZ Hotels Private Limited, appealed against the CIT(A)'s order upholding disallowances for interest on borrowed capital and legal/professional charges. The Assessing Officer had made additions resulting in a final assessed income of Rs. 40,120.

What were the issues?

Whether interest on borrowed funds used for business investments and legal/professional charges for such acquisitions are deductible expenses.

Which sections of the Income-tax Act were involved?

Section 36(1)(iii)

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Income Tax Appellate Tribunal, “SMC” “C’’ BENCH: BANGALORE

Before: SHRI CHANDRA POOJARI

For Appellant: Shri V. Srinivasan, A.R
For Respondent: Shri Ganesh R. Ghale, Standing Counsel for Department
Hearing: 08.02.2023Pronounced: 22.02.2023

This appeal by assessee is directed against order of CIT(A) dated 27.4.2022 for the assessment year 2018-19. The assessee has raised following grounds of appeal:- “1. The orders of the authorities below in so far as they are against the appellant are opposed to law, equity, weight of evidence, probabilities, facts and circumstances of the case.

2.

The learned CIT[A] is not justified in upholding the disallowance made U/s 36[1][iii] of the Act of Rs. 99,02,829/- being the interest paid on capital borrowed and used for purposes of business under the facts and in the circumstances of the appellant's case.

3.

The learned CIT[A] is not just

The order continues below.

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