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| The Tax Publishers2020 TaxPub(DT) 0851 (Mum-Trib) INCOME TAX ACT, 1961
Section 36(1)(iii)
Since assesse company had borrowed funds for business purposes and invested part of funds in sister concerns for strategic purpose or given as ICD to sister concern with whom assesse had deep business relations, Interest paid on borrowed capital and that invested in shares for strategic purpose was eligible for deduction especially when interest income on ICDs had been taxed as business income.
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Business deduction under Section 36(1)(iii) - Interest on borrowed capital - Investment of borrowed funds in sister concern for strategic purpose -
Assessee claimed deduction under Section 36(1)(iii). AO disallowed assessee's claim on the ground that assesse company had borrowed funds for investment in sister concern. Held: Since assesse company had borrowed funds for business purpose and invested part of funds in sister concerns for strategic purpose or given as ICD to sister concern with whom assesse had deep business relations, Interest paid on borrowed capital and that invested in shares for strategic purpose was eligible for deduction especially when interest income on ICDs had been taxed as business income.
REFERRED :
FAVOUR : in assessee's favour
A.Y. :
INCOME TAX ACT, 1961
Section 14A, 115JB
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