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| The Tax Publishers2020 TaxPub(DT) 4023 (Jod-Trib) : (2020) 207 TTJ 0248 INCOME TAX ACT, 1961
Section 36(1)(iii)
Where assessee had paid substantial amount as advance out of interest-free fund for purchase of a closed textile unit, for its business purpose, no disallowance could be made of interest on the advance made by assessee for purchasing the said unit.
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Business deduction under section 36(1)(iii) - Interest on borrowed capital - Advance for purchase of trxtile unit paid out of interest free funds -
Assessee paid advance out of interest-free funds for purchase of closed textile unit. for the purpose of its business. AO made disallowance of interest on borrowed capital on the ground of utilization of borrowed funds towards non-business purposes. Held: Assessee had acquired the assets, taken possession thereof and put to use the land for his business purposes, Moreover, assessee had submitted cash flow statement and details of business funds along with bank statements. Therefore, interest on the advance made by assessee for purchasing the said unit could not be disallowed.
REFERRED :
FAVOUR : In favour of assessee.
A.Y. : 2013-14 & 2014-15
IN THE ITAT, JODHPUR 'SMC BENCH
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