RAMESH VELJI SHAH ,MUMBAI vs. ACIT , CENTRAL CIRCLE -1, , THANE

ITA 4959/MUM/2024Status: DisposedITAT Mumbai05 June 2025AY 2019-20Bench: SHRI AMIT SHUKLA (Judicial Member), SHRI GIRISH AGRAWAL (Accountant Member)1 pages
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What did the Tribunal hold?

The Tribunal held that interest expenditure incurred on borrowed funds for business purposes, including capital contribution to partnership firms, is allowable as a deduction under Section 36(1)(iii) of the Income Tax Act, 1961. The absence of direct interest income from all such investments does not bar the deduction.

What were the facts?

The assessees claimed deductions for interest expenditure and professional fees against income from partnership firms. The Assessing Officer disallowed these deductions, arguing that interest-free investments were made from borrowed funds and that no interest income was earned from all partnership investments.

What were the issues?

Whether interest expenditure on borrowed funds used for investment in partnership firms is deductible, even if no direct interest income is earned from all such investments.

Which sections of the Income-tax Act were involved?

Section 36(1)(iii),Section 37(1),Section 28(v)

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Income Tax Appellate Tribunal, “D” BENCH MUMBAI

Before: SHRI AMIT SHUKLA & SHRI GIRISH AGRAWAL

Hearing: 02.04.2025Pronounced: 05.06.2025

PER GIRISH AGRAWAL, ACCOUNTANT MEMBER:

These two appeals filed by two different assessees are against the orders of Ld. CIT(A), Pune-11, vide order nos. ITBA/APL/S/250/2024- 25/1067089721(1), dated 29.07.2024 and ITBA/APL/S/250/2024- 25/1067132605(1) passed against the assessment order by DCIT, Central Circle-1, Thane, u/s. 143(3) of the Income-tax Act, 1961 (hereinafter referred to as the

The order continues below.

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