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| The Tax Publishers2019 TaxPub(DT) 4280 (Ahd-Trib) INCOME TAX ACT, 1961
Section 36(1)(iii)
As impugned advances at lower rate of interest had been made out of non-interest bearing own funds available with assessee, therefore, no disallowance of deduction under section 36(1)(iii) was called for.
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Business deduction under section 36(1)(iii) - Interest on borrowed capital - Advancement of loans at lesser rate of interest - Assessee having sufficient own funds
Assessee claimed deduction under section 36(1)(iii). AO disallowed assessee's claim proportionately on the ground of assessee having advanced loan to for non-business purpose at a lower rate of interest. Held: As evident assessee was having sufficient own funds, therefore, it could be safely presumed that no interest bearing funds had been diverted towards making of impugned advances, therefore, no disallowance of deduction under section 36(1)(iii) was called for.
Relied on:Reliance Utilities and Power Ltd. (2009) 313 ITR 340 (Bom) : 2009 TaxPub(DT) 1275 (Bom-HC) and CIT v. HDFC Bank Ltd. (2014) 366 ITR 505 (Bom) : 2014 TaxPub(DT) 3351 (Bom-HC).
REFERRED :
FAVOUR : In assessee's favour
A.Y. :
IN THE ITAT, AHMEDABAD BENCH
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