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| The Tax Publishers2019 TaxPub(DT) 1743 (Mad-HC) INCOME TAX ACT, 1961
Section 36(1)(iii)
Tribunal took a note of factual position and held that loans advanced by assessee was a business expediency by relying in case of SA Builders Ltd. v. CIT (2007) 288 ITR 1 (SC) : 2007 TaxPub(DT) 833 (SC). Merely because a reference was pending that did not mean that decision rendered by Supreme Court was no longer good law. Thus, transaction would qualify for 'business expediency'.
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Business deduction under section 36(1)(iii) - Assessee had diverted its interest bearing funds to sister/associate concerns - Allowability -
AO disallowed the interest under section 36(1)(iii) debited to P&L Account by assessee on the grounds that assessee was paying interest on the bank loans, unsecured loans and at the same time extending interest free loans to the sister concerns without any business consideration or commercial expediency. CIT(A) and Tribunal had deleted the disallowance made by AO.Held: Tribunal took a note of factual position and held that loans advanced by assessee was a business expediency. Tribunal had recorded the facts to support its stand that the decision in SA Builders Ltd. v. CIT (2007) 288 ITR 1 (SC) : 2007 TaxPub(DT) 833 (SC) would aid the case of assessee. CIT(A) was also satisfied with the nature of the transaction and it would qualify as 'business expediency'. Merely because a reference is pending that does not mean that the decision rendered by Supreme Court is no longer good law. CIT(A) and Tribunal had discussed the factual position and held that the transaction would qualify 'business expediency.
Relied:Addl. CIT v. Tulip Star Hotels Ltd. in (Special Leave to Appeal (Civil)....../2012 (CC 7138-7140/2012, dt. 30-4-2012) : 2014 TaxPub(DT) 4813 (SC), SA Builders Ltd. v. CIT (2007) 288 ITR 1 (SC) : 2007 TaxPub(DT) 833 (SC) and CIT v. Alapatt Jewellery (2016) 386 ITR 338 (Ker) : 2016 TaxPub(DT) 3868 (Ker-HC).
REFERRED :
FAVOUR : In assessee's favour.
A.Y. :
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