Hon’ble High Court has held that the assessee had advanced loan to its sister concern as a measure of commercial expediency by using borrowed funds, interest on such borrowed funds was to be allowed as deduction under section 36(1)(iii). Thus, reopening of assessment on the ground that interest claimed on borrowed capital was not allowable under section 36(1)(iii) was not justified. (AY.2009-10)
Vaman Prestressing Co. Pvt. Ltd. v. Addl. CIT (2023) 295 Taxman 252 / (2024) 461 ITR 192 (Bom)(HC)
S. 147 : Reassessment-With in four years-Advancing loan to sister concern from borrowed capital without interest-Loan was advanced out of commercial expediency-Reopening of assessment on the ground that interest claimed on borrowed capital is not allowable and hence, escaped assessment-Reassessment notice and order disposing the objection is quashed.[S. 36(1)(iii), 148, Art. 226]