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| The Tax Publishers2020 TaxPub(DT) 2174 (Mum-Trib) INCOME TAX ACT, 1961
Section 36(1)(iii)
Where AO disallowed proportionate interest expense, same was ordered to be deleted because assessee had sufficient own funds in form of current year's profit before depreciation and even otherwise, assessee had at its disposal corresponding interest-free advances received from various parties mainly comprising of share application money, which exceeded interest-free advances made by assessee.
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Business deduction under section 36(1)(iii) - Interest on borrowed capital - Assessee having sufficient own funds in form of current year's profit -
Assessee challenged order of CIT(A) confirming the action of AO disallowing proportionate expenses of interest amounting to Rs. 94,23,665. Held: Assessee was having sufficient own funds in form of current year's profit before depreciation. Even otherwise, assessee also contended that it had at its disposal corresponding interest free advances received from various parties mainly comprising of share application money, which exceeded interest-free advances made by assessee. Thus, disallowance of proportionate interest expense was deleted.
Followed:Virendra R. Gandhi v. ACIT [Tax Appeal No. 20 of 2004 with Tax Appeal No. 124 of 2005, dated 27-11-2014] CIT v. Sridev Enterprises (1991) 192 ITR 165 (Kar) : 1991 TaxPub(DT) 1071 (Karn-HC) M/s. Mecords India Ltd. v. ITO 2019 TaxPub(DT) 7555 (Mum-Trib)
REFERRED :
FAVOUR : In assessee's favour
A.Y. : 2011-12
IN THE ITAT, MUMBAI BENCH
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