Assessee's appeal dismissed for interest disallowance under sec 36(1)(iii); admin expenses issue not pressed.

The Tribunal dismissed the assessee's appeal against the disallowance of interest payment under section 36(1)(iii) as the transaction lacked evidence supporting its business nature. The Tribunal also rejected the disallowance of administrative expenses as the issue was not pressed during the proceedings.

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Issues: Disallowance of interest payment under section 36(1)(iii) and disallowance of administrative expenses.

Issue 1: Disallowance of interest payment under section 36(1)(iii)
The assessee appealed against the disallowance of interest payment of Rs. 2,08,27,869 on borrowed funds of Rs. 10 crores under section 36(1)(iii) of the Income-tax Act, 1961. The assessee argued that the transaction of lending/placing share application money for equity participation was a business activity. The assessee contended that the investment in shares of another company was for business purposes, even if treated as a loan. The Revenue argued that the assessee was not an Investment-company and questioned the purpose of the transaction. The Tribunal analyzed the nature of the transaction, finding no evidence that the amount was utilized for share purchase or that it was a business transaction. As no income was earned from the transaction, the interest was not allowable under section 57(iii). The Tribunal dismissed the appeal, stating that the facts did not support the assessee's contentions and the judgments cited were not relevant to the case.

Issue 2: Disallowance of administrative expenses
The second ground of disallowance of administrative expenses of Rs. 4,274 was not pressed by the assessee's representative during the proceedings. As no arguments were presented on this issue, the Tribunal rejected this ground as not pressed.

In conclusion, the Tribunal dismissed the assessee's appeal against the disallowance of interest payment under section 36(1)(iii) due to lack of evidence supporting the business nature of the transaction. The Tribunal also rejected the second ground of disallowance of administrative expenses as it was not pressed during the proceedings.

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