The assessee was a practising chartered accountant who had borrowed the money from his firm for the purposes of his profession at a higher rate of interest and lent it at a lower rate of interest. Tribunal held that borrowing money at a higher rate of interest from a related party and lending it at lower rate of interest to an unrelated party defied all commercial prudence expected from a chartered accountant. The Assessing Officer should have disallowed the entire interest claimed by the assessee. The findings of the Commissioner (Appeals) did not call for interference. (AY. 2014-15)
Mukul Gupta v. ITO (2021) 91 ITR 32 (SMC) (SN) (Delhi)(Trib.)
S. 57 : Income from other sources-Deductions-Interest-Chartered Accountant-Borrowing sum from firm in which he was partner paying interest and advancing sum to unrelated party at lower interest-Assessing Officer disallowing difference between interest earned and interest paid-Order is affirmed. [S. 56, 57(iii)]