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| The Tax Publishers2020 TaxPub(DT) 0769 (Mum-Trib) INCOME TAX ACT, 1961
Section 36(1)(iii)
As evident, assessee's own fund consisting of share capital and reserve and surplus was Rs. 175 crore interest free advance made to sister concern amounted to 4 crore, therefore, it could be safely presumed that no interest bearing funds have been diverted for making interest free loan to sister concern and, therefore, no proportionate disallowance of deductions 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 interest free loan to sister concern - 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 interest free loan to sister concern. Held : As evident, assessee's own fund consisting of share capital and reserve and surplus was Rs. 175 crore interest free advance made to sister concern amounted to 4 crore, therefore, it could be safely presumed that no interest bearing funds have been diverted for making interest free loan to sister concern and, therefore, no proportionate disallowance of deductions under section 36(1)(iii) was called for.
Relied :CIT v. Reliance Utilities & Power Ltd. 2009 TaxPub(DT) 1275 (Bom-HC)
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2008-09 & 2009-10
INCOME TAX ACT, 1961
Section 14A
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