Case Law Details
Rishabh Birla Vs JCIT (ITAT Delhi)
ITAT Delhi held that disallowance of interest u/s. 36(1)(iii) of the Income Tax Act to be restricted to the borrowed amount which is not used for business purpose.
Facts- AO made disallowance of Rs.38,29,320 by holding that the assessee has not utilized the loan funds for business purposes but diverted them for acquiring immoveable property, for giving advances against properties and for the purpose of the interest-free loan and advances to sister concerns, family members.
CIT(A) deleted an amount of Rs.14,24,034 and for the balance amount of Rs.24,05,286 directed AO to disallow the interest related to Rs.68,00,000 which was paid to the seller directly. CIT(A) directed AO to re-compute the disallowance by restricting it to the interest relatable to Rs.68,00,000.
Conclusion- In assessee’s own case, it is held that with respect to the interest disallowance pertaining to the Gurgoan property, the Assessing Officer was directed to re-calculate the disallowance by restricting it to interest portion related to Rs.68.00 lacs. It has been brought to our notice that in Assessment Years 2008-09 and 2009-10, the issue was restored to the file of the Assessing Officer and the Ld. CIT (A) respectively with the direction to re-compute the interest attributable to Rs.68.00 lacs.
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