INCOME TAX ACT, 1961

Section 36(1)(iii)

Business deduction under section 36(1)(iii) - Advances to sister concerns without charging any interest - Amount advanced for business purpose -

Assessee was a company engaged in manufacture and export of readymade garments. AO held that assessee advanced certain monies to its sister concern without charging interest on the same. It was further held that aforesaid monies have been advanced out of borrowed funds and interest should have been charged on the same. Accordingly, addition was made. Held: Assessee had furnished the complete details, which were forwarded to AO who did not make any comments in his remand report. It is pertinent to mention here that the aforesaid amount pertained to export transactions to avail export benefits and the assessee had an understanding with sister concern in this regard. Similarly, an amount was advanced to it. For improvement of a new building which was being constructed for the assessee under the lease agreement. AO did not comment anything in this regard in the remand report. CIT(A), therefore, held that the aforesaid amount was advanced by the assessee for business purpose as well as commercial expediency which was upheld by Tribunal. The aforesaid concurrent findings of fact neither suffer from any infirmity nor can be termed as perverse.

REFERRED :

FAVOUR : In assessee's favour

A.Y. : 2008-09

INCOME TAX ACT, 1961

Section 36(1)(iii)

SUBSCRIBE FOR FULL CONTENT