Munjal Sales Corporation v. Commissioner of Incometax

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The Tax PublishersIT Appeals Nos. 138 of 2004 and 667 of 2005 2008 TaxPub(DT) 2408 (P&H-HC) : (2008) 022 (I) ITCL 0148 : (2008) 298 ITR 0288 Munjal Sales Corporation v. Commissioner of Income Tax INCOME TAX ACT, 1961 Business deduction under section 36(1)(iii) - Allowability -Interest on borrowed capital to invest in partneship firm *Held: Since, assessee -company had advanced interest-free loans to its sister concerns for non-business purposes and no nexus of the funds borrowed vis--vis the funds diverted towards sister concerns on interest-free basis was found, therefore disallowance made by department of interest on borrowed capital was justified. Income-tax Act, 1961, Section 36(1)(iii) A.Y. :* 1996-97 Decision: In favour of revenue. Case Law Analysis:CIT v. Abhishek Industries Ltd. [2006] 286 ITR 1 (Punj. & Har.) SUBSCRIBE FOR FULL CONTENT

The Tax PublishersIT Appeals Nos. 138 of 2004 and 667 of 2005
2008 TaxPub(DT) 2408 (P&H-HC) : (2008) 022 (I) ITCL 0148 : (2008) 298 ITR 0288

Munjal Sales Corporation v. Commissioner of Income Tax

INCOME TAX ACT, 1961

Business deduction under section 36(1)(iii) - Allowability -Interest on borrowed capital to invest in partneship firm

Held: Since, assessee -company had advanced interest-free loans to its sister concerns for non-business purposes and no nexus of the funds borrowed vis--vis the funds diverted towards sister concerns on interest-free basis was found, therefore disallowance made by department of interest on borrowed capital was justified.

Income-tax Act, 1961, Section 36(1)(iii)

A.Y. : 1996-97
Decision: In favour of revenue.

Case Law Analysis:CIT v. Abhishek Industries Ltd. [2006] 286 ITR 1 (Punj. & Har.)