|The Tax Publishers2020 TaxPub(DT) 5022 (Bang-Trib)
INCOME TAX ACT, 1961Q
Where assessee advanced interest-free loan to sister concerns out of sufficient non-interest bearing own funds available with it, no disallowance of deduction under section 36(1)(iii) was called for.
Business deduction under section 36(1)(iii) - Interest on borrowed capital - Advancement of interest free loans to sister concerns - Assessee having sufficient own funds
Assessee claimed deduction under section 36(1)(iii). AO disallowed assessee's claim proportionately on the ground of assessee having advanced interest free loan to subsidiary companies. Assessee pleaded to have sufficient own funds. Held: Interest free funds available with assessee amounted to Rs. 16 crores, whereas interest free loans given to subsidiary companies stood at Rs. 10 crores, therefore, it could be safely presumed that loans were given out of interest free funds and accordingly, no disallowance of deduction under section 36(1)(iii) was called for.
Relied:CIT v. HDFC Bank Ltd. (2014)(49 taxmann.com 335)(Bom) : 2014 TaxPub(DT) 3351 (Bom-HC), Reliance Utilities & Power Ltd. 313 ITR 340, CIT v. Micro Labs Ltd. (2017) 79 taxmann.com 365 (Kar), CIT v. Brindavan Beverages (P) Ltd. (2017) 88 taxmann.com 477 (Kar.) : 2017 TaxPub(DT) 1187 (Karn-HC)
FAVOUR : In assessee's favour.
A.Y. : 2014-15
INCOME TAX ACT, 1961
SUBSCRIBE FOR FULL CONTENT