Sect. 36(1)(iii)- Interest-free loans & allowability of Interest on borrowings

Pr. CIT Vs. Consumer Marketing (India) (P) Ltd. (Gujarat High Court) From the facts it is apparent that the term loan, on which deduction of interest was sought, had entirely been used for the purpose of purchasing the assets which were hypothecated to the bank. The assessee had also produced sufficient evidence before the assessing officer to indicate that it had sufficient interest free funds to take care of the advances even if the same were accepted to be the advances. The Commissioner (Appeals) has recorded a categorical finding of fact to the effect that the assessing officer has failed ...