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Can interest disallowed u/s 36(1) (iii) allowed in next year

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Deepak Kumar

Chartered Accoountant

270 Points Posted on 20 March 2013

My Compnay is real estate company. & we have capilalized interest paid on running projects uptoF.Y. 08-09, But in F.Y. 09-10 we can not capitalized interest paid & claim in revenue. In Scruity case u/s 143(3) A.O. disallowed Interest paid in Sec 36(1) (iiii) saying that in previous year comapny has capitalized interest on running project. Now can our company increase project value by disallowed amount in F.Y. 12-13. & if yes pls answer with quoting section or case law.

thanking you

Replies (1)

Vineet Jaiswal

141 Points Posted on 21 March 2013

At the outset, it is to be mentioned that if the interest was debited to P/L account in FY 2009-10 following the principles laid down in the Accounting Standard then the same is not to be tinkered. The adjustment in 143(3) order would create a new value for the project w.r.t. tax.

However, if there was an error in debiting it to the P/L account in FY 2009-10, then the same can be rectified in FY 2012-13 by crediting the P/L account and the Project (asset) will be showing a renewed figure and the adjustment would be carried out in the Balance Sheet.