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| The Tax Publishers2019 TaxPub(DT) 2855 (Ahd-Trib) INCOME TAX ACT, 1961
Section 36(1)(iii)
Where assessee's interest-free funds were more than the interest free advance provided by it, there was no requirement to disallow any interest expenditure from the claim of the assessee.
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Business deduction under section 36(1)(iii) - Interest on borrowed capital - Interest free advance given to sister concern - Interest free funds being more than interest free advance
Assessee-company provided interest free advance to its sister concern. However, it debited interest expenses in Profit and Loss account. Thus, by taking rate of interest at 6% on the advance given to the sister concern, AO calculated notional interest, which was more than interest expenditure claimed by the assessee. Accordingly, he did not allow interest expenditure claimed by the assessee. Held: Since assessee's interest free funds were more than the interest free advance provided by it, there was no requirement to disallow any interest expenditure from the claim of the assessee.
Relied:CIT v. Reliance Utilities & Power Ltd. 2009 TaxPub(DT) 1275 (Bom-HC)
REFERRED :
FAVOUR : In assessee's favour
A.Y. : 2012-13
IN THE ITAT, AHMEDABAD BENCH
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