CIT v. Lokhandwala Construction Inds. Ltd.

Shree D.K. Associates, Mumbai vs. Pr CIT 32, Mumbai

In the result, the appeal of the assessee stands allowed

Bench: Shri P. K. Bansal & Shri Pawan Singh

…the interest should have been added to the work-in-progress instead of claiming it as a deduction. We noted that this issue is duly covered by the decision of Hon'ble Jurisdictional High Court in the case of CIT vs. Lokhandwala Construction Inds. Ltd. [2003] 260 ITR 579 (Bom) in which the Hon'ble High Court has held that the interest paid by a builder following a project completion method of accounting was allowable in the year of the payment in accordance with the provisions of section 36(1)(iii) of the Act. The fact that the assessee has claimed this expenditure as a deduction is apparent from page No. 136 of…

Ashish Builders Pvt. Ltd., Mumbai vs. D.C.I.T. Range 3(1), Mumbai

In the result, order of the CIT(Appeals) does not call for interference

Bench: Shri D. Karunakara Rao & Shri Saktijit Deyassessment Year: 2008-09 Assessment Year: 2007-08

…rest is allowable legally and validly as per the provisions of Section 36(1)(iii) of the Act. He also submitted that the above argument is based on the strength of the Jurisdictional High Court Judgment in the case of Lokhandwala Construction Industries Ltd., 260 ITR 579 (Bom) dated 15.01.2003. This judgment is relevant for the legal proposition that the construction project undertaken by the assessee builder constituted its stock-in- trade and the assessee is entitled to deduction u/s.36(1)(iii) in respect of interest on loan obtained for execution of the said project. Further, referring to decision of Tribunal…

Arihant Construction, Mumbai vs. Asst CIT 18(1), Mumbai

In the result, appeal of assessee is allowed in part

…t even under the Income Tax law, the interest expenses are to be treated as period cost for the builders. In this regard the assessee relied on the decision of Hon'ble Jurisdictional Bombay High Court in the case of CIT Vs. Lokhandwala Construction Inds. Ltd [260 ITR 579] wherein the hon'ble High Court has laid down that interest expenses incurred on capital borrowed for project i.e. stock in trade has to be allowed as deduction u/s 36(l)(iii) of the Act in the year of its incurrence. As per ld. AR the treatment of interest given by the assessee even in the books of account are inconformity with the judicial pron…

Jaisingh Builders, Mumbai vs. Addl CIT 21(1), Mumbai

In the result, the appeal of the Assessee is partly allowed

Bench: Shri C.N. Prasad & Shri Ashwani Tanejaassessment Year: 2008-09 Jaisingh Builders, Acit-21(1) 3, Harish, 72, Dixit Road, Pratyaksha Kar बनाम/ Vile Parle (E) Bhavan 601/C-10, Vs. Mumbai-400057 Bkc, Bandra(E), Mumbai-400051 (Assessee) (Revenue) P.A. No.Afopj6023P "नधा"रती क" ओर से / Assessee By Sanjay Parikh (Ar) Shri Ajay (Dr) राज"व क" ओर से / Revenue By 24/02/2016 सुनवाई क" तार"ख / Date Of Hearing : 16/03/2016 आदेश क" तार"ख /Date Of Order: आदेश / O R D E R Per Ashwani Taneja (): This Appeal Has Been Filed By The Assessee Against The Order Of Ld. Commissioner Of Income Tax (Appeals), Mumbai- 32 {(In Short ‘Cit(A)’}, Order Dated 26.03.2014 Passed Against Assessment Order U/S 143(3) Dated 30.11.2010 For The Assessment Year 2008-09 On The Following Grounds:

…r accounts to show that the loans taken in earlier years were utilized for carrying our construction of the impugned properties. He placed reliance upon the judgment of Hon’ble Bombay High Court in the case of CIT vs. Lokhandwala Construction Ind. Ltd. (2003) 260 ITR 579 (Bom) for the proposition that in the case of builder the construction project undertaken by the assessee constituted stock-in-trade and therefore, the assessee would be entitled to deduction of interest on loan u/s 36(1)(iii) in respect of interest on loan obtained for execution of said project. The reliance was also placed on the judgment of th…