| |
| The Tax Publishers2020 TaxPub(DT) 1840 (Bang-Trib) INCOME TAX ACT, 1961
Section 36(1)(iii)
When assessee after borrowing amount for the purpose of business, had kept part of it in short deposit in bank, interest paid on amount borrowed was not deductible from interest earned from short-term deposits, as borrowing was not for the purpose of earning such interest income.
|
Business deduction under section 36(1)(iii) - Interest on borrowed capital - Assessee after borrowing amount for the purpose of business kept part of it in short deposit with bank -
Assessee made fixed deposit with various banks amounting to Rs. 15 crore. At the same time, assessee availed of loan amounting to Rs. 2.5 crore from State Bank of India and claimed interest of Rs. 25 lakhs to be set off against interest received from various banks from fixed deposits. The same was denied.Held: When assessee after borrowing amount for the purpose of business, had kept part of it in short deposit with bank, interest paid on amount borrowed was not deductible from interest earned from short-term deposits, as borrowing was not for the purpose of earning such interest income.
Followed:Karnataka Forest Plantation v. CIT (1985) 156 ITR 275 (Karn-HC) : 1985 TaxPub(DT) 1305 (Karn-HC).
REFERRED :
FAVOUR : Against the assessee.
A.Y. : 2012-13 & 2013-14
IN THE ITAT, BANGALORE BENCH
 SUBSCRIBE FOR FULL CONTENT
|