Interest to Partners Allowable Despite No Active Business: ITAT Cochin

Muthoot Bankers Vs ITO (ITAT Cochin) Income Tax Appellate Tribunal (ITAT), Cochin Bench, has ruled in favor of Muthoot Bankers, a finance and money lending firm, allowing a deduction of Rs. 5,00,000 for interest paid to its partners for the Assessment Year 2006-07. The Tribunal’s decision, pronounced on June 13, 2025, sets aside the previous orders of the Assessing Officer (AO) and the Commissioner of Income-tax (Appeals) [CIT(A)], who had disallowed the interest payment. The appeal originated from an order dated November 25, 2024, issued by the CIT(A), Chennai, which had upheld the AO&#...