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Borrowing funds at higher rate & lending to director shows diversion of funds for non-business purpose
Case Law Details
- Case Name
- Asuda Holdings Private Limited Vs CIT (ITAT Mumbai)
- Appeal Number
- Only available for paid members
- Date of Judgement/Order
- Only available for paid members
- Related Assessment Year
- 2014-15
- Courts
- All ITAT, ITAT Mumbai
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Asuda Holdings Private Limited Vs CIT (ITAT Mumbai)
ITAT Mumbai held that there is a clear diversion of funds for non-business purpose as funds are borrowed @18% and lended the same to one of its directors at 13.5%. Accordingly, disallowance under section 36(1)(iii) sustained.
Facts- AO observed that assessee has taken loan from M/s. Elevators News Network Pvt. Ltd. (ENNPL) and paid interest @18%. AO further, observed that assessee has given a huge loan to one of its Director Mr. Anup Shyam Karnani and charged the interest @13.5%.
When the assessee was asked to substantiate on...
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