https://www.taxtmi.com/caselaws?id=763469 The ITAT Mumbai allowed the assessee's appeal against disallowance of interest expenditure claimed as deduction. The AO had disallowed interest paid under section 36(1)(iii) reasoning that investments in partnership firms were not earning income. The ITAT held that commercial expediency must be considered for interest allowability, and the investment was made for business purposes. The revenue failed to establish a one-to-one match proving borrowed funds were used for interest-free loans. The ITAT noted funds came from a pool including capital withdrawn from partnership firms, and some loans were earning interest, making the disallowance unsustainable. en-us Thu, 21 Nov 2024 00:00:00 +0530 Fri, 20 Dec 2024 08:46:56 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=763469 The ITAT Mumbai allowed the assessee's appeal against disallowance of interest expenditure claimed as deduction. The AO had disallowed interest paid under section 36(1)(iii) reasoning that investments in partnership firms were not earning income. The ITAT held that commercial expediency must be considered for interest allowability, and the investment was made for business purposes. The revenue failed to establish a one-to-one match proving borrowed funds were used for interest-free loans. The ITAT noted funds came from a pool including capital withdrawn from partnership firms, and some loans were earning interest, making the disallowance unsustainable. Case-Laws Income Tax Thu, 21 Nov 2024 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=763469