2018 (10) TMI 439

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....pellate Tribunal (Tribunal, for short) in ITA No. 954/Del/2016. 2. The present appeal raises only one question/issue which relates to disallowance of part interest paid on unsecured loans of Rs. 502.69 crores as the respondent-assessee had advanced Rs. 172.59 crores to third parties on which no interest was charged and received. The Assessing Officer had accordingly proportionately disallowed an amount of Rs. 23.60 crore from the interest of Rs. 68.75 crores/- paid by the respondent-assessee. 3. Learned counsel for the Revenue has drawn our attention to the order passed by the Assessing Officer which refers to the letter dated 10th March, 2015 written by the assessee to the Assessing Officer providing details of 50 top parties to whom....

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....ord, we find from Schedule 8 of the assessee's balance sheet, which contains details of Loans and advances, that as against the closing balance of advances amounting to Rs. 172.59 crore, the balance in the preceding year ending on 31.3.2010 stood at Rs. 173.41 crore. This shows that the amount of advance has come down slightly vis-a-vis the preceding year. The Id. AR contended that no disallowance of interest on such outstanding brought forward Loans and Advances receivable was made in the preceding year. This contention has not been controverted on behalf of the Revenue. We find that the A.O has simply computed the disallowance of interest in proportion to the amount of interest bearing unsecured loans obtained amounting to Rs. 502.....

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..... Versus Commissioner of Income Tax (Appeals) Chandigarh And Another, (2007) 1 SCC 781, had interpreted section 36(1)(iii) of the Act to observe that interest paid on capital borrowed for the purpose of business is to be allowed as a deduction in computing taxable income. The expression "for purposes of business or profession" occurring in Section 36(1)(iii) of the Act is wider in scope than the expression "for the purpose of earning income, profits or gains". Accordingly, expenditure voluntarily incurred and meeting the "commercial expediency" test is to be allowed as a deduction. It is immaterial if a third party also benefits by the said expenditure. The expression "commercial expediency" is again of wide import and is satisfied once it ....