1986 (11) TMI 132

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....enial of interest under s. 214 of the IT Act, 1961. 2. The assessee is a registered firm which had obtained a contract for the construction of building for the MES. The assessee framed out the contract and the income consisted only of the commission received from the sub-contract. The assessee had borrowed funds and advanced it to M/s. Scrap Trading Co., for the purpose of purchase of iron and ....

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....nterest on the borrowed funds should be disallowed as not related to the business. But we are of the opinion that this issue cannot be decided with reference to the obligation but only with reference to the actual deployment of funds. It is not in dispute that the funds were actually utilised for obtaining iron and steel for the contract work and it cannot be denied that the borrowed funds were us....

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....t that the advance tax instalment payable is itself calculated under the Act only after taking into account the tax deducted, at source and, therefore, if a refund materialises because of excess payment of tax in whatever form, interest is to be given under s. 214 since the Govt, had the benefit of the amount within the accounting year. He also relied upon the decisions of the Gujarat High Court i....