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| The Tax Publishers2020 TaxPub(DT) 4644 (Del-Trib) INCOME TAX ACT. 1961
Section 36(1)(iii)
Where loans taken were utilised for advancing the loans in furtherance of their business, assessee was entitled to claim that the difference between the interest paid and interest received alone had to be considered towards the claim of interest expenditure and any disallowance of the interest expense has to be made only with reference to the difference amount, and not with reference to the entire interest amount paid, therefore, AO was directed to limit the disallowance of 15%.
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Business Deduction under section 36(1)(iii) - Interest paid on loan - Where utilised for advancing the loans in furherance of their business -
During the course of assessment proceedings, AO noted that assessee had debited interest expenses and since there was no evidence to prove the fact that the loan on which the interest and finance expenses were paid exclusively, was utilised for the purpose of the business of the assessee, AO had taken a view that an amount equivalent to 15% of such interest expense had to be disallowed under section 36 (1)(iii). Held: Loans taken were utilised for advancing the loans in furtherance of their business and, therefore, assessee was entitled to claim that difference between interest paid and interest received alone had to be considered towards the claim of interest expenditure and any disallowance of the interest expense had to be made only with reference to the difference amount and not with reference to the entire interest amount paid. Thus, AO was directed to limit the disallowance of 15% and to delete the balance amount.
REFERRED :
FAVOUR : Partly In assessee's favour.
A.Y. : 2011-12
INCOME TAX ACT, 1961
Section 14A
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