Pre-amendment reassessment limitation bars late notices under the preserved regime, invalidating consequential reassessment for affected earlier asses...
Cash-sales explanations for bank deposits require documentary reconciliation; reassessment notice survived where effective response time was available...
Functional comparability in transfer pricing prevents ad hoc arm's length adjustments where functions, assets, risks and reliable comparables are unes...
The ITAT allowed the assessee's appeal and held that the disallowance of interest expenditure claimed as a deduction against interest income from the partnership firm was not sustainable. The assessee had sourced funds from both interest-bearing loans and non-interest-bearing funds, which were majorly invested in the capital of partnership firms for business purposes. The revenue contended that since the investment did not earn any income except from one firm, the interest paid u/s 36(1)(iii) was not allowable. However, the ITAT observed that the commercial expediency must be considered for allowability u/s 36(1)(iii), and the revenue did not raise any contention in this regard. The ITAT noted that without establishing a one-to-one match, it cannot be said that the borrowed funds were used for giving interest-free loans and advances. As some loans extended were earning interest, the disallowance u/s 36(1)(iii) was not sustainable.
The ITAT allowed the assessee's appeal and held that the disallowance of interest expenditure claimed as a deduction against interest income from the partnership firm was not sustainable. The assessee had sourced funds from both interest-bearing loans and non-interest-bearing funds, which were majorly invested in the capital of partnership firms for business purposes. The revenue contended that since the investment did not earn any income except from one firm, the interest paid u/s 36(1)(iii) was not allowable. However, the ITAT observed that the commercial expediency must be considered for allowability u/s 36(1)(iii), and the revenue did not raise any contention in this regard. The ITAT noted that without establishing a one-to-one match, it cannot be said that the borrowed funds were used for giving interest-free loans and advances. As some loans extended were earning interest, the disallowance u/s 36(1)(iii) was not sustainable.
Note: It is a system-generated summary and is for quick reference only.
TaxTMI 
TaxTMI 
of 4918 
