2025 (10) TMI 1067 - SCH - Income Tax

Petition dismissed; deletion under s.36(1)(iii) upheld as cash-accounting investor's interest not disallowable, matching principle inapplicable

The SC dismissed the Special Leave Petition and declined to interfere under Art. 136, upholding the tribunal's deletion of the addition under ... Disallowance u/s 36(1)(iii) - assessee had advanced interest bearing funds without charging any interest to its associated concerns - concept of 'Matching Principles' - tribunal deleted addition - HC [2022 (7) TMI 1603 - MADRAS HIGH COURT] decided whether it is commercially expedient or not for the Assessee cannot be decided by the Revenue authorities and unless a decision taken in the usual course of business by the Assessee can be held to be arbitrary or motivated, deliberately taken to defeat the purpose of the Revenue, it cannot be held that the lower interest rate paid to the borrowers on the borrowings made by the assessee company is disallowable u/s 36 (1) (iii). Tribunal, rightly held that when the cash system of accounting was adopted by the Assessee, an Investment Company, whose business is only to borrow and lend or invest, the same cannot be said to be not in the business interest or commercially expedient for the purpose of business and the concept of 'Matching Principles', which has been applied by the Assessing Authority and the CIT (A) in the present case, was not really applicable - no substantial question of law can be said to be arising. HELD THAT:- We are not inclined to interfere with the impugned order in exercise of our jurisdiction under Article 136 of the Constitution of India. Special Leave Petition is, accordingly, dismissed and the accompanying interlocutory application(s), if any, stands disposed of. 'Delay condoned.' The Court declined to exercise its discretionary jurisdiction under Article 136 of the Constitution of India, stating: 'We are not inclined to interfere with the impugned order in exercise of our jurisdiction under Article 136 of the Constitution of India.' Consequently, 'The Special Leave Petition is, accordingly, dismissed' and the accompanying interlocutory application(s), if any, stand disposed of. No reasons beyond the exercise of discretion are recorded in the order. The procedural posture reflects: (i) acceptance of delay and its condonation; (ii) refusal to grant special leave to challenge the impugned order; and (iii) final disposal of the petition and any ancillary interlocutory applications.