Case Law Details
VIC Enterprises Pvt. Ltd. Vs ACIT (ITAT Delhi)
ITAT Delhi held that the scholarship to a student who was neither an employee nor associated with the company for any commercial or business purpose doesn’t satisfy the provisions of section 36 and section 37 and hence not allowable as deduction.
Facts- The assessee is one of the holding companies of Dabur India Ltd. and is also an NBFC carrying on its business of financing and investment.
AO disallowed the total interest paid amounting to Rs. 4,68,52,493/- on the ground that the assessee had made various interest free advances. Had the assessee charged interest from those parties, being an NBFC the interest income would have been more than whatever has been paid by the assessee and accordingly disallowed the whole of the interest paid by the assessee.
Assessee had sponsored a meritorious student Miss Vinne Vandal to study in California University under the Faculty of Economics. Miss Vinne Vandal is not a relative of any director, but the sponsorship has been made on account of commercial expediency keeping in mind to have such type of person in its business.
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