Commercial vehicle depreciation, scientifically determined warranty provisions and exempt-income disallowances were resolved in favour of the taxpayer...
Disallowance of interest difference between the rate paid on borrowed capital and the rate advanced to a wholly owned subsidiary is not warranted. The Supreme Court in S.A. Builders held that advancing funds by a holding company to its subsidiary for commercial expediency does not warrant disallowance of interest, even if not charged. The Delhi Tribunal in Moonrock Hospitality ruled that where funds were advanced to a wholly owned subsidiary for business purposes, no interest paid on borrowed funds could be disallowed u/s 36(1)(iii) of the Income Tax Act. Following these precedents, the Tribunal held that no disallowance of interest paid on borrowed funds was permissible and directed the Assessing Officer to delete the addition.
Disallowance of interest difference between the rate paid on borrowed capital and the rate advanced to a wholly owned subsidiary is not warranted. The Supreme Court in S.A. Builders held that advancing funds by a holding company to its subsidiary for commercial expediency does not warrant disallowance of interest, even if not charged. The Delhi Tribunal in Moonrock Hospitality ruled that where funds were advanced to a wholly owned subsidiary for business purposes, no interest paid on borrowed funds could be disallowed u/s 36(1)(iii) of the Income Tax Act. Following these precedents, the Tribunal held that no disallowance of interest paid on borrowed funds was permissible and directed the Assessing Officer to delete the addition.
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