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The Tax PublishersITA No. 1507/Ahd/2018 with C.O. 79/Ahd/2019
2020 TaxPub(DT) 1590 (Ahd-Trib)INCOME TAX ACT, 1961
Section 36(1)(iii)
Since own interest free funds of assessee exceeded amount of interest free advances and accordingly, no disallowance of interest expenses on account of diversion of fund was warranted.
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Business deduction under Section 36(1)(iii) - Interest on borrowed capital - Advancement of interest free loan - 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 certain parties. Held: Admittedly, amount of interest free advances stood at Rs. 56 lacs whereas own funds of assessee stood at Rs. 1.15 crores. Thus, own interest free funds of assessee exceeded amount of interest free advances and accordingly, no disallowance of interest expenses on account of diversion of fund was warranted.
Relied:CIT v. HDFC Bank Ltd. 366 ITR 505 (Bom)Supported by:UTI Bank Ltd. 32 Taxmann.com 370 (Guj)
REFERRED :
FAVOUR : in assessee's favour
A.Y. :
INCOME TAX ACT, 1961
Section 37(1)
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