Assessee had borrowed funds on which interest was paid, and advanced same to its subsidiary as share application money without charging interest.\u00a0 Assessing Officer held that funds were diverted for non-business purposes, and therefore disallowed interest under section 36(1)(iii) along with upfront fee paid for obtaining loan.Commissioner (Appeals) and Tribunal held that share application money advanced to subsidiary was for business purpose and investment was commercially expedient, given high telecom sector valuation and assessee’s 64% stake.\u00a0 It was further held that since assessee would benefit from subsidiary\u2019s growth, interest and upfront fee on borrowed funds used for this purpose were allowable under section 36(1)(iii) and board had approved transaction as part of normal business activity\u00a0 High Court held that both Commissioner (Appeals) as well as ITAT had come to a factual finding and law was also clear that if an assessee for commercial expediency and in normal course of its business activities takes loan to invest in shares of its subsidiary, in such circumstances, interest paid on those advances utilized would be allowable expenditure under Section 36(1)(iii). There was delay of 295 days in filing SLP which had not been satisfactorily explained by revenue. SLP dismissed on ground of delay and question of law, if any, would be kept open.(AY. 2008-09)<\/p>\n","protected":false},"excerpt":{"rendered":"
S. 36(1)(iii) : Interest on borrowed capital-Advance to subsidiary-Share application money without charging interest-Commercial expediency and in normal course of its business activities-High Court affirmed the order of Tribunal-Delay of 295 days in filing SLP which had not been satisfactorily explained by revenue-SLP dismissed on ground of delay and question of law, if any, would be kept open.[Art. 136] <\/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-59232","post","type-post","status-publish","format-standard","hentry","category-income-tax-act"],"acf":[],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p9S2Rw-fpm","jetpack-related-posts":[],"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/59232","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=59232"}],"version-history":[{"count":1,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/59232\/revisions"}],"predecessor-version":[{"id":59233,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/59232\/revisions\/59233"}],"wp:attachment":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/media?parent=59232"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/categories?post=59232"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/tags?post=59232"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}