The ITAT sustained disallowance of proportionate interest on...

The ITAT sustained disallowance of proportionate interest on interest-free advances to sister concerns because the assessee failed to show a direct nexus between borrowed funds and business purpose. It accepted that interest relating to assets not put to use must be capitalised, but remanded that issue to the Assessing Officer for factual verification of the assessee's suo motu disallowance. It also upheld disallowance under section 40(a)(ia), holding that the provision applies to both amounts paid and amounts payable during the year without tax deduction at source. The additional ground on conversion charges, including related interest, was rejected as inadmissible and lacking merit.