Allowing the appeal of the assessee the Court held that, the assessee is\u00a0 in\u00a0 the business of real estate. The assessee had borrowed the capital to purchase shares so as to have effective control in order to expand its real estate business. Thus, the investment in shares was nothing but expansion of business of the assessee. Therefore, all the conditions necessary for deduction under S. \u00a0\u00a036(1)(iii) were prima facie satisfied by the assessee. The dominant purpose of the assessee to borrow the capital was to acquire the shares to have effective control over\u00a0 so as to expand the business of the assessee. In that view of the matter, the CIT (A) was not justified in granting deduction of interest paid by the assessee under S.\u00a0 57(iii) of the Act. The assessee was entitled to deduction of interest paid on capital borrowed for investment in the shares of\u00a0 for the purpose of expansion for its business under S.\u00a0 36(1)(iii).( AY.1996-97, 1997-98)<\/p>\n
\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"
S. 36(1)(iii) :Interest on borrowed capital \u2013 Real estate business- Amount borrowed to purchase shares to expand business- Controlling interest – Interest allowable as deduction [ S. 37(1) , 57(iii) ] <\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[21],"tags":[],"class_list":["post-12609","post","type-post","status-publish","format-standard","hentry","category-income-tax-act"],"acf":[],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p9S2Rw-3hn","jetpack-related-posts":[],"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/12609","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/comments?post=12609"}],"version-history":[{"count":3,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/12609\/revisions"}],"predecessor-version":[{"id":17029,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/12609\/revisions\/17029"}],"wp:attachment":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/media?parent=12609"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/categories?post=12609"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/tags?post=12609"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}