9911796707
TMI Blog2015 (4) TMI 103X X X X Extracts X X X X X X X X Extracts X X X X ..... d exclusively for the purpose of business and the same is allowable deduction. The interest paid on the borrowed capital for the purpose of business is deductable under Section 36(1)(iii) as per the ratio laid down in the case of CIT vs. L.G. Balakrishnan & Bros (P.) (1973 (9) TMI 5 - MADRAS High Court ) - Decided in favour of assessee. - Income Tax Appeal Defective No. -3 of 2007 - - - Dated:- 11-3-2015 - Hon'ble Tarun Agarwala And Hon'ble Dr. Satish Chandra,JJ. For the Appellant : Rakesh Ranjan Agrawal, Suyash Agarwal For the Respondent : A. N. Mahajan, S.C., B. J. Agarwal ORDER (Per Hon'ble Dr. Satish Chandra, J) The present appeal is filed by the assessee against the impugned order dated 16th Septemb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irst Appellate Authority. On the other hand, Shri R.K. Upadhyaya, the learned counsel for the Department has justified the impugned order passed by the Tribunal. We heard both the parties at length and gone through the materials available on record. From the record, it appears that the assessee had started the crushing business, which was closed in the financial year 1992-93, and since then no business was done by the assessee, but the liability of the borrowed fund was continued. No interest was paid to the depositors up to the assessment year 1997-98 and 1998-99, but on a settlement between the depositors and firm, it was finally assessed that the interest is to be paid to them in the year under consideration. By virtue of the settleme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the liability was continued. In the instant case, the borrowed funds were utilized exclusively for the purpose of business and interest was capitalized thereupon and it was the business liability of the assessee to pay the same. The assessee, being the prudent businessman, has entered into settlement to clear the debt by paying the interest only for one year. The remaining interest was waived off by the creditors, so we are of the view that the amount of ₹ 1,22,134/- was paid exclusively for the purpose of business and the same is allowable deduction. In view of the above, we set aside the order passed by the Tribunal and restored the order passed by the First Appellate Authority. The assessee will get the relief accordingly. ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
