Assessee borrowed funds in order to acquire control of two companies. Interest paid on borrowed funds was claimed as an allowable expenditure by assessee under section 36(1)(iii), read with section 57\u00a0 of the Act. AO disallowed the claim. Tribunal held that interest payment by assessee in acquiring control of two companies would result in earning exempt dividend income and, therefore, same was not allowable. Allowing the appeal of the assessee the Court held Disallowance of expenditure on\u00a0 imaginary income and expenditure of subsequent year is held to be not justified. Followed CIT\u00a0\u00a0 v. Rajeeva Lochan Kanoria (1994) 208 ITR 616 (Cal)(HC).<\/p>\n","protected":false},"excerpt":{"rendered":"
S. 36(1)(iii) : Interest on borrowed capital\u2013Investment in acquiring control of two companies\u2013Disallowance of expenditure on imaginary income and expenditure of subsequent year is held to be not justified \u2013 Expenditure is held to be allowable. [S. 14A, 57]<\/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":[1],"tags":[],"class_list":["post-4836","post","type-post","status-publish","format-standard","hentry","category-digest"],"acf":[],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p9S2Rw-1g0","jetpack-related-posts":[],"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/4836","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=4836"}],"version-history":[{"count":0,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/4836\/revisions"}],"wp:attachment":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/media?parent=4836"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/categories?post=4836"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/tags?post=4836"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}