Since the assessee was not eligible to seek license to develop by itself a housing project without acquiring 100 acres of contiguous land, interest free advances were given to the associate companies. The Court held that such advances were for assessee’s business and therefore, no disallowance u/s 36(1)(iii) was required. (AY. 1995-96 to 2009-10)(ITA No. 210 of 2003 dt. 20.03.2019)
CIT v. Gopal Das Estates & Housing (P) Ltd. (2019) 308 CTR 201 (Delhi)(HC)
S. 36(1)(iii) : Interest on borrowed capital–interest free advance given to associates for the assessees’s business–Held, no disallowance required.