Penalty for estimation of income and disallowances for tax non-deduction clarified: estimation-based penalties not sustainable; additions without conc...
Managerial remuneration disallowance under s.40A(2)(b) challenged over alleged tax-avoidance; appellate decision restored deletion of addition for dir...
Dominant issue: Whether disallowance under section 36(1)(iii) for alleged diversion of funds is justified. Reasoning: Tribunal found admitted interest receipts from partners and that the assessee charged interest on partners' debit balances, which compensates use of funds; there was also acceptance of availability of substantial interest-free funds and no nexus established between borrowed funds and alleged non-business advances. Legal basis: s.36(1)(iii) requires proof of diversion of borrowed funds for non-business purposes. Outcome: Disallowance under s.36(1)(iii) was unsustainable and the assessee's appeal is allowed. - ITAT
Dominant issue: Whether disallowance under section 36(1)(iii) for alleged diversion of funds is justified. Reasoning: Tribunal found admitted interest receipts from partners and that the assessee charged interest on partners' debit balances, which compensates use of funds; there was also acceptance of availability of substantial interest-free funds and no nexus established between borrowed funds and alleged non-business advances. Legal basis: s.36(1)(iii) requires proof of diversion of borrowed funds for non-business purposes. Outcome: Disallowance under s.36(1)(iii) was unsustainable and the assessee's appeal is allowed. - ITAT
Note: It is a system-generated summary and is for quick reference only.
TaxTMI 
TaxTMI 
of 4814 
Join Channel 
