Interest on drawings by partners for Non-Business Purposes is disallowable

Progressive Poultry Farm Vs ITO (ITAT Visakhapatnam) As per provision of 36(1)(iii) of the Income Tax Act, 1961, if any amounts are used for non-business purposes by the assessee, the same are to be disallowed. Since in this case, the partners have made drawings from the assessee firm and used for non business purposes, the provisions of section 36(1)(iii) are squarely applicable. It is an undisputed fact that the assessee firm borrowed some interest bearing funds in the form of capital from the partners and in the form of secured loans. It is also an undisputed fact that some of the partners ...