Disallowance u/s 36(1)(iii) of interest expenses not justified on failure to prove direct nexus

ACIT Vs Shri Rohit Kochar (ITAT Delhi)

Disallowance under Section 36(1)(iii) of interest expenses not justified on failure to prove direct nexus between interest bearing funds and interest-free advances

Conclusion:

Disallowance under section 36(1)(iii) was not justified as Revenue had failed to establish any nexus between the interest bearing funds and interest free advances made to his relatives and friends and there was no cogent evidence on the file that secured loans had not been used by assessee for business purposes.

Held:

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