Assessing Officer held that\u00a0 borrowed funds were utilized by assessee for non-business purposes i.e. investments in mutual funds and FDR’s and thus was not allowable as deduction. CIT(A) allowed the deduction which was affirmed by the Tribunal\u00a0 on the ground that\u00a0 the assessee was under contractual restrictions in respect of utilization of borrowed funds; and was also liable to pay substantial amount of liquidation damages\/pre-payment charges in case it made a prepayment of loan repayments. Due to contractual restrictions and liquidation damages\/pre-payment charges, it was neither prudent for assessee to divert any part of borrowed funds for non-business purposes nor was it prudent to make pre-payment of loan even if assessee had its own interest free funds.\u00a0 On appeal by the Revenue the Court held that in absence of any contrary material on record, deduction claimed by assessee under section 36(1)(iii) was to be allowed for relevant year.\u00a0 (AY.\u00a0 2013-14, 2014-15)<\/p>\n","protected":false},"excerpt":{"rendered":"
S. 36(1)(iii) : Interest on borrowed capital-liquidation damages\/pre-payment charges-Own interest free funds-Expenditure incurred towards payment of interest on borrowed funds was to be allowed as deduction.<\/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-30266","post","type-post","status-publish","format-standard","hentry","category-income-tax-act"],"acf":[],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p9S2Rw-7Sa","jetpack-related-posts":[],"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/30266","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=30266"}],"version-history":[{"count":1,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/30266\/revisions"}],"predecessor-version":[{"id":30267,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/30266\/revisions\/30267"}],"wp:attachment":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/media?parent=30266"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/categories?post=30266"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/tags?post=30266"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}