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TMI Blog2014 (12) TMI 1068X X X X Extracts X X X X X X X X Extracts X X X X ..... advances were made without business consideration - the funds have been borrowed by the assessee company - the transactions are genuine and they are also not entered into with any malafide intention to deprive the Department from lawful revenue, which is otherwise payable by the assessee - The dominant intention of these transactions was for ultimate benefit of the assessee and, thus, the same was entered into with business considerations - as decided in S.A.Builders Ltd. Vs. Commissioner of Income Tax (Appeals) and Another, [2006 (12) TMI 82 - SUPREME COURT] - assessee borrowed the funds, such funds have been borrowed for the purpose of business, the assessee has also paid interest on such funds, the case of the assessee is also not cover ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... following substantial questions of law: Whether, the Appellate Tribunal is right in law and on facts in deleting the addition of ₹ 9,82,129/under Section 36(1)(iii) being the amount of interest paid by the assessee on the borrowing which amounts the assessee lent to another party with whom the assessee had business dealings ? 4. Learned counsel for the appellant revenue has contended that both the authorities namely the Commissioner of Income Tax as well as the ITAT have committed an error in deciding the matter. He submitted that the Tribunal has not properly appreciated the materials available on record. He, therefore, urged that the present appeal deserves to be allowed. 5. On the other hand, learned advoca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... systematic and regular business activity and therefore the said advances to GMMSS Ltd. was not for any personal relation but for the purpose of the business of assessee. 12. For a claim of deduction of interest u/s. 36(1)(iii) all that is necessary is that the money i.e. capital must have been borrowed by the assessee. Secondly, it should have been borrowed for the purpose of business. Profession of vocation of the assessee and thirdly the assessee should have paid the amount as an allowance under that clause. This clause makes more distinction between the capital borrowed in order to acquire a revenue assets. It does not say that borrowing of capital should have been necessarily for the purpose of business. So as to hold th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e payable by the assessee. The dominant intention of these transactions was for ultimate benefit of the assessee and, thus, the same was entered into with business considerations. 14. In this case, (i) the assessee borrowed the funds,(ii) such funds have been borrowed for the purpose of business (iii) the assessee has also paid interest on such funds, (iv) the case of the assessee is also not covered under the provisions of Section 40A(2). Therefore, in our considered opinion, the interest is allowable under the provisions of Section 36(1)(iii) of the Act. The addition of ₹ 9,82,129/is therefore, deleted and the findings of the Ld. CIT(A) are reversed. 7. In view of the aforesaid discussion and in view of the principle ..... X X X X Extracts X X X X X X X X Extracts X X X X
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