INCOME TAX ACT, 1961

Section 36(1)(iii)

Business deduction under section 36(1)(iii) - Interest on borrowed capital - Loan amount utilized for making strategic investments -

Assessee-company claimed to have engaged in business of generation, transmission, distribution and supply of electric energy claimed deduction under section 36(1)(iii). AO denied deduction on the ground that loans availed of were utilized in acquiring shares of other companies and there was no business commenced by assessee in the relevant year. Held: Purchase of making of strategic investments was also a commercial transaction which amounted to commencement of business and, therefore, interest on borrowed loan utilized for acquiring shares to gain control in company engaged in similar line of business was allowable deduction under section 36(1)(iii).

Relied:CIT v. Rajeeva Lochan Kanoria (1994) 208 ITR 616 (Cal) : 1994 TaxPub(DT) 1040 (Cal-HC), Divakar Solar System Ltd. v. Dy. CIT (2017) 53 ITR (Trib) 516 (Kol) : 2016 TaxPub(DT) 5174 (Kol-Trib)<./i> and i>ITO, Ward 11 (2), New Delhi v. First American Securities (P) Ltd. [ITA No.4768/Del./2012, dt. 11-1-2016) : 2016 TaxPub(DT) 1101 (Del-Trib).

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2010-11

INCOME TAX ACT, 1961

Section 37(1)

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