Interest disallowance under section 36(1)(iii) not sustained where unchanged facts and prior years' favorable view were followed.

Disallowance of interest expenditure under section 36(1)(iii) was deleted because the issue had already been decided in the assessee's favour for earlier years and that view had been affirmed by the Delhi High Court. The borrowings, fund utilisation and availability of free surplus funds remained unchanged, and no fresh factual basis justified a different view for the year under appeal. The same position was therefore followed and the deletion of the disallowance was sustained.

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Issues: Whether the disallowance of interest expenditure under section 36(1)(iii) of the Income-tax Act, 1961 was liable to be deleted.

Analysis: The issue had already been decided in the assessee's own case for earlier assessment years in favour of the assessee and that view had been affirmed by the Delhi High Court. The borrowings, utilisation of funds and availability of free surplus funds were found to be unchanged over the years, and a more detailed factual examination for the year under appeal did not justify taking a different view.

Conclusion: The deletion of the disallowance was sustained and the issue was decided in favour of the assessee.

Ratio Decidendi: Where the relevant facts remain unchanged and the issue has been consistently decided in the assessee's favour in earlier years, the same view should ordinarily be followed, particularly when supported by higher judicial affirmation.

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