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| The Tax Publishers2019 TaxPub(DT) 2374 (Visakhapatnam-Trib) : (2019) 071 ITR (Trib) 0147 INCOME TAX ACT, 1961
Section 57(iii)
Assessee was engaged in the business of running hotel and made investments in M/s. Vishnu Priya Hotels (P) Ltd. out of borrowed funds. Thus, it could not be said that assessee had diverted funds for non-business purpose. and accordingly, related interest expenditure was deductible under the head 'Income from other sources'.
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Income from other sources - Deduction under section 57(iii) - Interest expenditure on borrowed funds invested in another entity engaged in similar line of business - No case made out to prove diversion of funds for non-business purposes
AO disallowed interest expenditure on borrowed funds invested in M/s. Vishnk Priya Hotels P. Ltd. under section 57(iii).Held: Assessee was engaged in the business of running hotel and made investments in M/s. Vishnu Priya Hotels (P) Ltd. out of borrowed funds. Thus, it could not be said that assessee had diverted funds for non-business purpose. and accordingly, related interest expenditure was deductible under the head Income from other sources.
Relied:CIT v. Rajendra Prasad Moody (1978) 115 ITR 519 (SC) : 1978 TaxPub(DT) 1028 (SC).
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2012-13 & 2013-14
INCOME TAX ACT, 1961
Section 14A
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