HC allows interest on borrowed Funds advanced to Subsidiary Companies

Advocate Akhilesh Kumar Sah

The Pr. CIT Vs DLF Hotel Holding Ltd. (Delhi High Court)

DLF Hotel Holding Case: Interest On Borrowed Funds Allowed As Deduction Under Section 36(1)(iii) Even If Some Of Funds Financed To Subsidiary Companies

In PCIT vs. DLF Hotel Holding Ltd (ITA NO.1012/2018 decided on 28.09.2018) the facts in brief were that during the period relating to the A.Y. 2010-11 an addition of Rs.83,63,03,480/- was made to the opening balance of the paid up share capital of the respondent-assessee, enhancing the same to Rs.1259,68,00,000/-. The respondent-assessee had invested Rs.1165,23,06,015/- in shares of group companies. The respondent assessee had also taken unsecured loans of Rs. 223,10,02,165/- on which interest of Rs. 12,83,76,153/- was paid and claimed as a deduction under Section 36(1)(iii) of the Income Tax Act. 1961(for short ‘the Act’).

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