Borrowing funds at higher rate & lending to director shows diversion of funds for non-business purpose

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 the above transa...