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| The Tax Publishers2020 TaxPub(DT) 4971 (Del-Trib) INCOME TAX ACT, 1961
Section 36(1)(iii)
Since interest-free advances to sister concerns were made out of sufficient own funds available with assessee and, 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 interest free loan to sister concern - Assessee having sufficient own funds
Assessee claimed deduction under section 36(1)(iii). AO disallowed assessee's claim on the ground of assessee having made interest free loan to sister concerns.Held: Assessee had sufficient interest-free funds of Rs. 176 crores as against this, interest bearing liabilities were only to the tune of Rs. 13 crore. Accordingly, it could be safely presumed that interest free advances to sister concerns were made out of sufficient own funds available with assessee and, therefore, no disallowance of deduction under section 36(1)(iii) was called for.
Relied:Reliance Utilities and Power Ltd. (2009) 313 ITR 340 (Bom) : 2009 TaxPub(DT) 1275 (Bom-HC) and HDFC Bank Ltd. (2014) 366 ITR 505 (Bom) : 2014 TaxPub(DT) 3351 (Bom-HC).
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2009-10
INCOME TAX ACT, 1961
Section 40A(2)(b)
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