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| The Tax Publishers2020 TaxPub(DT) 4186 (Jp-Trib) INCOME TAX ACT, 1961
Section 36(1)(iii)
Where assessee had not furnished any Fund Flow Statement to show that interest free advances had been given out of its own funds or out of interest free funds available with him neither it was able to show that the interest free advances were given for business purposes, no infirmity could be found in the order of AO making disallowance of interest under section 36(1)(iii).
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Business deduction under section 36(1)(iii) - Interest on borrowed capital - Interest-free advances to sister concern - No business expediency
AO made disallowance of interest in respect of interest-free loan and advances given by assessee to related concerns. Against this, assessee contended that it had sufficient interest free capital and trade creditors for making the interest free advance to the above parties. Held: Assessee had not furnished any Fund Flow Statement to show that interest free advances had been given out of assessee's own funds or out of interest free funds available with him neither it was able to show that the interest free advances were given for business purposes. Thus, no infirmity can be found in the order of AO making disallowance of interest in respect of interest-free advances given to related concerns.
REFERRED :
FAVOUR : In favour of assessee.
A.Y. :
IN THE ITAT, JAIPUR BENCH
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