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| The Tax Publishers2020 TaxPub(DT) 2233 (Chd-Trib) INCOME TAX ACT, 1961
Section 36(1)(iii)
Where AO alleged that less interest charged by assessee from advances made to its partners and certain party, as opposed to that paid on borrowings made by it, allegation did not survive because assessee demonstrated that it actually paid less interest on borrowings and charged more from partners and others, thus, disallowance made under section 36(1)(iii) was deleted.
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Business deduction under section 36(1)(iii) - Interest on borrowed capital - Allegation that less interest was charged by assessee from partners and others -
Assessee challenged order of CIT(A) confirming addition made under section 36(1)(iii) of Income Tax Act, 1961 by AO on account of less interest charged from partners, and certain party, without any basis and without giving any reasons in his order. Held: Assessee paid interest on unsecured loans during relevant year at an average rate of 10% as reflected in financial statements of assessee which were duly audited. Since basic premise with revenue for making disallowance in instant case under section 36(1)(iii) was that assessee charged less interest on advances made to its partners and others, as opposed to that paid on borrowings made by it, same did not survive. Since assessee demonstrated that it actually paid less interest on borrowings and charged more from partners and others. Thus, disallowance made under section 36(1)(iii) was deleted.
REFERRED :
FAVOUR : In assessee's favour
A.Y. : 2014-15
INCOME TAX ACT, 1961
Section 68
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