Held that if there is sufficient interest-free funds available with the assessee and such funds were advanced without charging any interest, the disallowance under section 36(1)(iii) on account of notional interest was unjustifiable. As the assessee’s interest-free funds were adequate to cover the amounts overdrawn by the partners, the addition made by the Assessing Officer under section 36(1)(iii) is not valid. (AY.2018-19)
Dy. CIT v. Avinash Builders (2024)114 ITR 324 (Raipur)(Trib)
S. 36(1)(iii) :Interest on borrowed capital-Interest free funds-Capital withdrawn-Addition is deleted.
Leave a Reply