ARTI R. KATHOTIA,MUMBAI vs. DCIT 12(3), MUMBAI

This appeal filed by the assessee is directed against order of the Ld CIT(A)-23, Mumbai, dated 21/03/2014 and it pertains to Assessment Year-2006-07.

The brief facts of the case are that during the course of assessment proceedings, the AO noted that the assessee has debited interest amounting to Rs.18,41,873/- on borrowed funds. From the various details furnished by the assessee, the AO noted that interest has been paid on loans borrowed from M/s Khazana Tradelinks Ltd. The AO further noted that loan borrowed from M/s Khazana Tradelinks Ltd. had been used for purchase of residential flat and other investments which are not relevant to her business, therefore, he opined that interest on loan claimed against business income cannot be allowed as deduction, Accordingly disallowed total interest claimed under section 36(1)(iii) of the Act.

Aggrieved by the assessment order, the assessee preferred an appeal before the Ld CIT(A). Before the Ld CIT(A), the assessee has reiterated her submissions made before the AO to argue that interest disallowance worked out by the AO on the basis of utilisation of funds is incorrect and also excessive. The assessee had also challenged the findings of the AO in rejection of interest on loan used for purchase of property, which is deductible under section 24(b) of the Act. The Ld CIT (A) after considering the submissions of the assessee held that AO had given categorical findings after examination of bank statement, Investment in property, jewellery, share application money and share debentures as per which funds to the tune Rs.2,59,65,718/- has been used for non-business purposes, therefore, the AO has rightly computed disallowance of interest. As regards claim of deduction of interest u/s 24(b) of the Act, the arguments of the assessee cannot be accepted in view of the reasons given by the AO and also the fact that the assessee has not shown that construction of the building stood completed in the year under consideration and that conditions laid down in section 24(b) of the Act are satisfied. Accordingly, dismissed appeal filed the assessee.

We have heard Ld DR, perused the material available on record and gone through the orders of authorities below. We find that the AO has given categorical findings in light of various evidence filed by the assessee, including bank statement and arrived at utilisation of funds to the extent of Rs.2,59,65,718/- out of total borrowed funds for non-business purposes and accordingly, worked out interest disallowance under section 36(1)(iii) of the Act. We further noted that the AO has also given categorical finding in respect of interest deduction under section 24(b) and held that the assessee has failed to prove with necessary evidence that the building construction has been completed for the year under consideration and conditions prescribed u/s 24(b) of the Act, has been satisfied in order to give benefit of deduction towards interest on borrowed capital u/s 24(b) of the Act. Before us, the assessee has neither appeared nor filed any details to controvert the findings of the fact recorded by the Ld AO as well as Ld CIT(A). Therefore, we are of the considered view that there is no error in the findings recorded by Ld. CIT(A) and hence we are inclined to uphold the findings of the Ld CIT(A) and dismissed the appeal filed by the assessee.

In the result, appeal filed by the assessee is dismissed.