https://www.taxtmi.com/caselaws?id=768990 The ITAT Mumbai upheld CIT(A)'s decision allowing deduction u/s 36(1)(iii) for interest expenses on borrowed capital. The AO had disallowed the expenditure claiming the assessee conducted no business activity during the year. The Tribunal held that absence of revenue receipts cannot determine expenditure allowability, as businesses incur fixed costs regardless. Since the borrowed capital was for stock-in-trade purposes (not fixed assets), the proviso to section 36(1)(iii) was inapplicable. The Tribunal found no justification for the AO's stance and dismissed the Revenue's appeal. en-us Mon, 10 Mar 2025 00:00:00 +0530 Thu, 17 Apr 2025 08:37:09 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=768990 The ITAT Mumbai upheld CIT(A)'s decision allowing deduction u/s 36(1)(iii) for interest expenses on borrowed capital. The AO had disallowed the expenditure claiming the assessee conducted no business activity during the year. The Tribunal held that absence of revenue receipts cannot determine expenditure allowability, as businesses incur fixed costs regardless. Since the borrowed capital was for stock-in-trade purposes (not fixed assets), the proviso to section 36(1)(iii) was inapplicable. The Tribunal found no justification for the AO's stance and dismissed the Revenue's appeal. Case-Laws Income Tax Mon, 10 Mar 2025 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=768990