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The Tax PublishersITA No. 1852/Ahd/2018
2020 TaxPub(DT) 4745 (Ahd-Trib)INCOME TAX ACT, 1961
Section 36(1)(iii)
Since interest-free advances were made out of sufficient interest-free own funds available at disposal of assessee, no disallowance of dedcution under section 36(1)(iii) was called for.
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Business deduction under section 36(1)(iii) - Interest on borrowed capital - Advancement of interest-free loan to wife of employee - Assessee having sufficient own funds
Assessee claimed deduction of interest paid under section 36(1)(iii). AO made proportionate disallowance on the ground of assessee having advanced interest-free loans to wife of employee without any business expediency. Assessee pleaded to have sufficeint own funds. Held: Interest-free own funds available at disposal of assessee were far in excess of interest free advances, therefore, presumption would arise in favour of assessee that advances were made from interest-free funds available with assessee and, therefore, no disallowance of deduction under section 36(1)(iii) was called for.
Supported by:CIT v. Reliance Utilities and Power Ltd. (2009) 313 ITR 340 (Bom) : 2009 TaxPub(DT) 1275 (Bom-HC) and CIT v. Raghuvir Synthetics Ltd. (Judgment, dated 5-12-2011 TA. No. 829 of 2007) : 2013 TaxPub(DT) 1612 (Guj-HC).
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2014-15
INCOME TAX ACT, 1961
Section 14A Rule 8D(2)(ii) & (iii)
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