“Section 36(1)”

Section References (mined)Section 36Section 36(1)3,872 judgments

The decision most relied on for Section 36(1) is CIT v. Reliance Utilities & Power Ltd. (313 ITR 340), cited in 2,118 judgments on BharatTax.

Leading authorities on Section 36(1)

CIT v. Reliance Utilities & Power Ltd.

313 ITR 340 · 2009 · High Court

2,118

citing judgments

Where an assessee claims that investments were made out of own funds, interest disallowance under Section 14A read with Rule 8D may not apply if the assessee demonstrates the availability of sufficient interest-free funds to cover such investments.

CIT v. AIMIL Ltd.

321 ITR 508 · 2010 · High Court

1,629

citing judgments

Employee contributions to PF and ESIC, deposited beyond the due date under the respective Acts but within the due date for filing the income tax return under Section 139(1), are allowable deductions under Section 36(1)(va). Such disallowance cannot be made during processing under Section 143(1).

S.A. Builders Ltd. v. CIT

288 ITR 1 · 2007 · Supreme Court

1,484

citing judgments

Interest paid on borrowed funds cannot be disallowed merely because the assessee made interest-free advances, provided those advances were made for business purposes and commercial expediency. The Revenue cannot dictate a businessman's commercial decisions, but the assessee bears the onus to prove the business expediency.

Checkmate Services Pvt. Ltd. v. CIT

143 Taxmann.com 178 · 2022 · Supreme Court

1,392

citing judgments

Employee contributions to provident fund and ESI deposited by an employer beyond the due dates prescribed under the respective special Acts are not allowable as a deduction under section 36(1)(va) of the Income-tax Act, 1961. Such disallowance can be made during processing under section 143(1).

CIT v. Alom Extrusions Ltd.

319 ITR 306 · 2009 · Supreme Court

1,344

citing judgments

A proviso inserted into a section to remedy unintended consequences, make the section workable, or supply an obvious omission must be read retrospectively in operation to give effect to the section as a whole.

CIT v. HDFC Bank Ltd.

366 ITR 505 · 2014 · High Court

1,261

citing judgments

When an assessee possesses interest-free funds sufficient to cover investments yielding tax-free income, it is presumed that such investments were made from these interest-free funds, precluding disallowance of interest expenditure under Section 14A.

CIT v. Gujarat State Road Transport Corporation

366 ITR 170 · 2014 · High Court

1,158

citing judgments

Employees' contributions to welfare funds, such as provident fund, are not allowable as a deduction under section 36(1)(va) if deposited beyond the due date prescribed under the respective welfare statutes, even by a single day. Such delayed deposits are not cured even if made before the income-tax return filing due date.

TRF Ltd. v. CIT

323 ITR 397 · 2010 · Supreme Court

714

citing judgments

For claiming deduction for bad debts under section 36(1)(vii) of the Income Tax Act, it is sufficient for the assessee to write off the debt as irrecoverable in its accounts, and it is not necessary to prove that the debt has actually become irrecoverable.

Judgments citing Section 36(1)

Chhattisgarh State Power Transmission Company Limited, Raipur vs. Assistant Commissioner of Income Tax, Circle-4(1), Raipur

In the result, the appeal of the assessee in ITA No

ITA 143/RPR/2019[2012-13]Status: DisposedITAT Raipur04 Jul 2023AY 2012-13

Bench: Shri Ravish Sood & Shri Arun Khodpiaआयकर अपील सं. / Ita No.81/Rpr/2020 "नधा"रण वष" / Assessment Year : 2011-12 Chhattisgarh State Power Transmission Company Ltd. Executive Director (Fin.), Csptcl, Second Floor, Sldc Building, Cseb Office Campus, Danginiya Raipur-492 013 (C.G.) Pan : Aadcc5773E .......अपीलाथ" / Appellant बनाम / V/S. The Assistant Commissioner Of Income Tax, Circle-4(1), Raipur (C.G.) ……""यथ" / Respondent

For Appellant: Shri R.B Doshi, CAFor Respondent: Shri V.K Singh, CIT-DR

Section 143(2)Section 143(3)

funds, viz. Employee’s Provident fund (EPF) and Employee’s State Insurance (ESI) is liable to be disallowed as per the mandate of Section 36(1)(va) r.w.s. 2(24)(x) of the Act. 19. Considering the law laid down by the Hon’ble Apex Court in the case ... that the delayed deposit of employee’s share of contribution towards EPF & ESI is liable to be disallowed as per the mandate of Section 36(1)(va) r.w.s. 2(24)(x) of the Act. The Hon’ble Apex Court had observed that the employee’s share of contribution towards

Tab India Granites Private Limited, Jaipur vs. DCIT Circle 1, Jaipur

In the result, all the three appeals of the assessee in ITA No

ITA 136/JPR/2023[2017-18]Status: DisposedITAT Jaipur04 Jul 2023AY 2017-18

Bench: SHRI SANDEEP GOSAIN (Judicial Member), SHRI RATHOD KAMLESH JAYANTBHAI (Accountant Member)

For Appellant: Shri Rohan Sogani, CAFor Respondent: Smt. Runi Pal, Addl.CIT

Section 143(1)Section 143(1)(a)Section 154Section 2(24)(x)Section 34(1)(iv)Section 36(1)(va)Section 43B

could have been treated only as receipts not amounting to income. When Parliament introduced the amendments in 1988-89, inserting Section 36(1)(va) and simultaneously inserting the second proviso of Section 43B, its intention was not to treat the disparate nature of the amounts, similarly. As discussed previously ... prescribed time – by way of contribution of the employees’ share to their credit with the relevant fund is to be treated as deduction (Section 36(1)(va)). The other important feature is that this distinction between the employers’ contribution (Section 36(1)(iv)) and employees’ contribution required to be deposited

Dhabriya Polywood Limited, Jaipur vs. DCIT Central Circle-1, Jaipur

In the result, all the three appeals of the assessee in ITA No

ITA 122/JPR/2023[2020-21]Status: DisposedITAT Jaipur04 Jul 2023AY 2020-21

Bench: SHRI SANDEEP GOSAIN (Judicial Member), SHRI RATHOD KAMLESH JAYANTBHAI (Accountant Member)

For Appellant: Shri Rajeev Sogani,CA &For Respondent: Smt. Runi Pal, Addl.CIT

Section 143(1)Section 143(1)(a)Section 36(1)(va)

supra) is reproduced as under:- ‘’53. The distinction between an employer’s contribution which is its primary liability under law – in terms of Section 36(1)(iv), and its liability to deposit amounts received by it or deducted by it (Section 36(1)(va)) is, thus crucial. The former ... later retains its character as an income (albeit deemed), by virtue of Section 2(24)(x) - unless the conditions spelt by Explanation to Section 36(1)(va) are satisfied i.e., depositing such amount received or deducted from the employee on or before the due date. In other words, there

S.S.Flexi Pack Private Limited, Raipur vs. ACIT-Circle-1(1), Raipur

ITA 97/RPR/2021[2018-19]Status: DisposedITAT Raipur03 Jul 2023AY 2018-19

Bench: Shri Ravish Sood & Shri Arun Khodpiaआयकर अपील सं. / Ita No.97/Rpr/2021 "नधा"रण वष" / Assessment Year : 2018-19 S.S. Flexi Pack Private Limited Near Barkha Hotel, Station Road, Raipur (C.G.)-492 001 Pan: Aahcs3562K .......अपीलाथ" / Appellant बनाम / V/S. The Assistant Commissioner Of Income Tax, Circle-1(1), Raipur (C.G.) ……""यथ" / Respondent

For Appellant: NoneFor Respondent: Shri S. K. Meena, CIT-DR

Section 143(1)Section 36(1)(va)Section 43Section 43B

liable to be disallowed as per the mandate of 4 S.S. Flexi Pack Private Limited Vs. ACIT, Circle-1(1), Raipur Section 36(1)(va) r.w.s. 2(24)(x) of the Act. As pointed out by the Ld. DR, and, rightly so, the order of the Tribunal in the captioned ... that the delayed deposit of employee’s share of contribution towards EPF & ESI is liable to be disallowed as per the mandate of Section 36(1)(va) r.w.s. 2(24)(x) of the Act. The Hon’ble Apex Court had observed that the employee’s share of contributions towards

Roche Products (India) Pvt Ltd, Mumbai vs. The Asst Comm of Income Tax-1(3)(1), Mumbai

In the result, appeal filed by the assessee is allowed for statistical purposes

ITA 307/MUM/2023[2018-19]Status: DisposedITAT Mumbai30 Jun 2023AY 2018-19

Bench: Shri Aby T. Varkey, Jm & Ms. Padmavathy S, Am आयकर अपील सं/ I.T.A. No.307/Mum/2023 (निर्धारण वर्ा / Assessment Year: 2018-19) Roche Products (India) Pvt. बिधम/ Acit-1(3)(1) Ltd. Room No. 540, 5Th Floor, Vs. 8Th Floor, 146-B, 166A, Unit Aayakar Bhavan, M. K. No.7, 8 & 9, R City Mall Road, Mumbai-400020. Lal Bahadur Shastri Marg, Ghatkopar (West), Mumbai- 400086. स्थधयी लेखध सं./जीआइआर सं./Pan/Gir No. : Aaacr2744K (अपीलार्थी /Appellant) .. (प्रत्यर्थी / Respondent) Assessee By: Shri Shrihari Iyer Revenue By: Smt. Mahita Nair (Sr. Ar) सुनवाई की तारीख / Date Of Hearing: 01/06/2023 घोषणा की तारीख /Date Of Pronouncement: 30/06/2023 आदेश / O R D E R Per Aby T. Varkey, Jm: This Is An Appeal Preferred By The Assessee Against The Order Of The Ld. Cit(A)/Nfac, Delhi Dated 09.12.2022 For Ay 2018-19. 2. At The Outset, The Ld. Ar Of The Assessee Pointed Out That The Adjustment Made By The Cpc U/S 143(1) Of The Income Tax Act, 1961 (Hereinafter “The Act”) Disallowing The Employee’S Contribution Towards Pf/Esic For Belated Deposits Is In Line With The Decision Of The Hon’Ble Supreme Court In The Case Of Checkmate Services Pvt. Ltd. Vs. Cit (448 Itr 518). Therefore, He Does Not Contest The Action Of The Cpc On Principle As Such. However, His Limited Prayer Is That This Lapse (Of Not Depositing The Employee’S Contribution Within The Due- Date) Was Only In Few Months (Refer Chart Infra). According To Assessee, A Careful Perusal Of The Deposit Of Contribution In The Relevant Government Account Of Pf/Esic, It Would Reveal That Assessee Had Been Depositing More Amount I.E. Advance Amount In The Relevant

For Appellant: Shri Shrihari IyerFor Respondent: Smt. Mahita Nair (Sr. AR)

Section 143(1)

filing of return of income is allowable u/s 43B of the Act. 4 A.Y. 2018-19 Roche Products (India) b) Amendment to section 36(1)(va) of the Act vide Finance Act, 2021 is prospective and effective from 1 April 2021 i.e. AY 2021-22. c) Disallowance of employee

Icici Bank Limited, Mumbai vs. The Dy. Commissioner of Income-Tax 2(3)(1), Mumbai

In the result both appeals of the assessee and revenue are dismissed

ITA 158/MUM/2023[2001-02]Status: DisposedITAT Mumbai30 Jun 2023AY 2001-02

Bench: Shri Amit Shukla & Shri Amarjit Singhdcit Cir 3(1) Vs. Icici Bank Ltd. Room No. 607, 6 Th Floor, Icici Towers, Bkc, Aayakar Bhavan, Bandra(E) Mumbai-400020 Mumbai-400051 स्थायी लेखा सं./जीआइआर सं./Pan/Gir No: Aaact1398K Appellant .. Respondent Icici Bank Ltd. Vs. Dcit Cir. 2(3)(1) Icici Towers, North East Room No. 552, 5Th Floor, Wing, Ground Floor, Aayakar Bhavan, M.K. Bkc, Bandra(E) Road, Mumbai-400020 Mumbai-400051 स्थायी लेखा सं./जीआइआर सं./Pan/Gir No: Aaact1398K Appellant .. Respondent Appellant By : Ms. Aarti Visanji, Ar Respondent By : Shri. K.C. Selvamani, Dr Date Of Hearing 01.06.2023 Date Of Pronouncement .06.2023 आदेश / O R D E R Per Amarjit Singh (Am)

For Appellant: Ms. Aarti Visanji, ARFor Respondent: Shri. K.C. Selvamani, DR

Section 10Section 115JSection 143(3)Section 148Section 154Section 33Section 47

Assessing Officer failed to appreciate that a. all material facts regarding the claim of exemption under section 10(33), deduction under section 36(1)(viii) and exemption under section 10(236) was on record at the time of original assessment and the assessment order under section

ACIT-1(1)(1), Mumbai vs. M/S Abhyudaya Co-Op Bank Limited, Mumbai

The appeal of the Revenue is dismissed

ITA 1128/MUM/2023[2012-2013]Status: DisposedITAT Mumbai30 Jun 2023AY 2012-2013

Bench: Smt Kavitha Rajagopal () & Ms. Padmavathy S. ()

Section 143(3)Section 148Section 36Section 36(1)(vii)Section 36(1)(viia)Section 36(2)

issued a show cause notice to the assessee with regard to the amount of Rs.4,21,14,192/- claimed as a deduction under section 36(1)(vii) by stating that – “4. From the perusal of the records, it is found that assessee has claimed ... that assessee was having balance of Rs. 19,96,39,699- in Provision for Bad and Doubtful Debts created as per provisions of Section 36(1)(viia), for which assessee has claimed deduction in earlier years. As per the provisions of Section 36(1)(vii) of the Act, only

Sangir Plastics Pvt Ltd, Mumbai vs. National E-Assessment Centre, Delhi

In the result, the appeal of the assessee in ITA No

ITA 1062/MUM/2023[2018-19]Status: DisposedITAT Mumbai30 Jun 2023AY 2018-19

Bench: Shri B.R. Baskaran (Am) & Shri Rahul Chaudhary (Jm)

Section 143(1)Section 143(3)Section 40A(7)Section 43B

Officer/CPC to delete the same. 14. The next issue contested by the assessee relates to disallowance of Rs. 1,52,240/- made under section 36(1)(va) of the Act in respect of employees’ contribution. The Learned AR submitted that the provident fund dues received from employees for the month

Sangir Plastics Pvt Ltd, Mumbai vs. DCIT, CPC, Bangalore

In the result, the appeal of the assessee in ITA No

ITA 1061/MUM/2023[2018-19]Status: DisposedITAT Mumbai30 Jun 2023AY 2018-19

Bench: Shri B.R. Baskaran (Am) & Shri Rahul Chaudhary (Jm)

Section 143(1)Section 143(3)Section 40A(7)Section 43B

M/S Gulabchand & Co, Mumbai vs. Deputy Commissioner of Income Tax, CPC Bangalore., Mumbai

In the result, appeal filed by the assessee is dismissed

ITA 1922/MUM/2022[2019-20]Status: DisposedITAT Mumbai30 Jun 2023AY 2019-20

For Appellant: NoneFor Respondent: Shri Soumendu Kumar Dash (Sr

Section 143(1)Section 36(1)(va)Section 40Section 40A(2)Section 41Section 43B

noteworthy, that this provision was part of the original IT Act, it has largely remained unaltered. On the other hand, section 36(1)(va) was specifically inserted by the Finance Act, 1987, with effect from 1-4-1988. Through the same amendment, by section 3(b), section 2(24) which ... income. Since these amounts were not receipts that belonged to the assessee, but were held by it, as trustees, as it were, section 36(1)(va) was inserted specifically to ensure that if these receipts were deposited in the EPF/ESI accounts of the employees concerned, they could be treated

Yes Bank Limited, Mumbai vs. DCIT - 2(2)(2), Mumbai

In the result, both the appeals of the Revenue and assessee he appeals of the Revenue and assessee are allowed partly for statistical purposes

ITA 3501/MUM/2018[2014-15]Status: DisposedITAT Mumbai30 Jun 2023AY 2014-15

Bench: Shri Om Prakash Kant () & Ms. Kavitha Rajagopal () Assessment Year: 2014-15 Dcit-2(2)(2), M/S Yes Bank Ltd., Room No. 545, 5Th Floor, 9Th Floor, Nehru Centre, Discovery Of Vs. Aayakar Bhavan, India, Dr. Ab Road, Worli, M.K. Road, Churchgate, Mumbai-400018. Mumbai-400020. Pan No. Aaacy 2068 D Appellant Respondent Assessment Year: 2014-15 M/S Yes Bank Ltd., Dcit-2(2)(2), 9Th Floor, Nehru Centre, Room No. 545, 5Th Floor, Aayakar Discovery Of India, Dr. Ab Vs. Bhavan, Road, Worli, M.K. Road, Churchgate, Mumbai-400018. Mumbai-400020. Pan No. Aaacy 2068 D Appellant Respondent

For Appellant: Mr. Yogesh Thar/Ms. Ayushi ModaniFor Respondent: Dr. Kishor Dhule, DR

Section 14ASection 251

GROUND GROUND NO. IX: SETTING ASIDE TO THE AO THE GROUND GROUND NO. IX: SETTING ASIDE TO THE AO THE GROUND ON SECTION 36(1)(viia) OF THE ACT: ON SECTION 36(1)(viia) OF THE ACT: 1. On the facts and circumstances of the case ... branches within the meaning of section Appellant had rural branches within the meaning of section Appellant had rural branches within the meaning of section 36(1) (via) when all the relevant details were available on 36(1) (via) when all the relevant details were available on 36(1) (via) when

DCIT-2(2)(2), Mumbai vs. Yes Bank Ltd., Mumbai

In the result, both the appeals of the Revenue and assessee he appeals of the Revenue and assessee are allowed partly for statistical purposes

ITA 3239/MUM/2018[2014-15]Status: DisposedITAT Mumbai30 Jun 2023AY 2014-15

For Appellant: Mr. Yogesh Thar/Ms. Ayushi ModaniFor Respondent: Dr. Kishor Dhule, DR

Section 14ASection 251

The DCIT Cir 3(1), Mumbai vs. M/S. Icici Bank Ltd, Mumbai

In the result both appeals of the assessee and revenue are dismissed

ITA 5765/MUM/2008[2001-2002]Status: DisposedITAT Mumbai30 Jun 2023AY 2001-2002

For Appellant: Ms. Aarti Visanji, ARFor Respondent: Shri. K.C. Selvamani, DR

Section 10Section 115JSection 143(3)Section 148Section 154Section 33Section 47

Hawa Singh, Delhi vs. ITO-Ward, 62 (1), New Delhi

In the result, the appeal of the assessee is allowed for statistical purposes

ITA 2535/DEL/2022[2018-19]Status: DisposedITAT Delhi30 Jun 2023AY 2018-19

Bench: Shri Kul Bharat[Assessment Year : 2018-19] Hawa Singh, Vs Ito, F-228/A, Main Lane Lado Sarai, Ward-62(1), Mehrauli, New Delhi-110030. New Delhi. Pan-Avpps1958R Appellant Respondent Appellant By Shri Mukul Gupta, Ca Respondent By Shri Om Parkash, Sr.Dr Date Of Hearing 27.06.2023 Date Of Pronouncement 30.06.2023

Section 36(1)(va)Section 43B

erred in confirming the disallowance made by the Ld. AO amounting Rs, 15,33,114/- by invoking provisions of Section 36(1)(va) of the Income Tax Act. 3. That the Ld. CIT(A) erred in confirming the addition made by the ld. A.O. amounting

Satpal Kaswan, Haryana vs. Ward-4(1), Gurgaon

In the result, appeals are allowed for statistical purposes

ITA 1848/DEL/2021[2019-20]Status: DisposedITAT Delhi28 Jun 2023AY 2019-20

Bench: Shri Saktijit Dey, Vice- & Shri Girish Agrawal

For Appellant: Sh. Ummed Kuntal, CAFor Respondent: Sh. B.K. Singh, Sr. DR

Section 36(1)(va)

authority. 3. Before us, it is the say of the assessee that due to misstatement/misreporting of facts, the disallowance has been made under section 36(1)(va) of the Act. However, on a reading of the order passed by the first appellate authority, it is observed that the assessee

Satpal Kaswan, Haryana vs. Ward-4(1), Gurgaon

In the result, appeals are allowed for statistical purposes

ITA 1847/DEL/2021[2018-19]Status: DisposedITAT Delhi28 Jun 2023AY 2018-19

Bench: Shri Saktijit Dey, Vice- & Shri Girish Agrawal

For Appellant: Sh. Ummed Kuntal, CAFor Respondent: Sh. B.K. Singh, Sr. DR

Section 36(1)(va)

Turner & Townsend Pvt. Ltd., New Delhi vs. ACIT, Circle- 25(2), New Delhi

In the result, Appeal of the assessee is allowed

ITA 8763/DEL/2019[2012-13]Status: DisposedITAT Delhi28 Jun 2023AY 2012-13

Bench: Shri Anil Chaturvedi & Shri Yogesh Kumar U.S.

For Appellant: Department by: Shri Mrinal Kumar, Sr. DFor Respondent: Shri Mrinal Kumar, Sr. D

Section 139(1)Section 143(2)Section 143(3)Section 144C

disallowance made on account of non-deposition of employee's contribution to PF within the time allowed as per the relevant statute under section 36(1) val of the Act to the tune of Rs. 42,40,062/-. (i) During the year under consideration, the total employee's contribution payable ... Subsequently, while computing the taxable income for the said year, no disallowance was made by the Appellant insofar the provisions of section 36(1)(va) of the Act are concerned based on the following premises: 10 Turner & Townsend Pvt. Ltd. Vs. ACIT (a) Amount of Rs. 1

Chandra Shekhar Tiwari, Flat No. B-9, D-224, Tanwar Residency, Tulsi Marg, Bani Park, Jaipur vs. Income Tax Officer, Ward-1(2), Jaipur

In the result, all the three appeals of the assessee in ITA No

ITA 101/JPR/2023[2020-21]Status: DisposedITAT Jaipur28 Jun 2023AY 2020-21

Bench: SHRI SANDEEP GOSAIN (Judicial Member), SHRI RATHOD KAMLESH JAYANTBHAI (Accountant Member)

For Appellant: Shri S.L. Poddar, AdvocateFor Respondent: Shri A.S. Nehra, Addl. CIT-DR

Section 143(1)Section 154Section 2(24)(x)Section 36(1)Section 36(1)(va)Section 43B

erred in confirming the addition of Rs.34,17,630/- as per the provisions of Section 2(24)(x) read with Section 36(1)(va) of the Income Tax Act, 1961 on account of delay in payment of ESI and PF made by CPC u/s 154 of the Income ... settled position of law upto the stage of Apex Court that payment of ESI/PF etc. are governed by Section 43B which overrides Section 36(1)(va). He further submitted that as per the provisions of Section 43B, such payments are paid before filing of return of income and then these

Calyx Chemicals and Pharmaceuticals Limited, Mumbai vs. Assistant Director of Income Tax, CPC Bengaluru, Bengaluru

In the result, the appeal by the assessee is dismissed

ITA 971/MUM/2023[2019-20]Status: DisposedITAT Mumbai27 Jun 2023AY 2019-20

Bench: Shri Prashant Maharishi & Shri Sandeep Singh Karhail

For Appellant: NoneFor Respondent: Shri Prasoon Kabra

Section 143(1)Section 143(1)(a)Section 250Section 36(1)(va)

Income Tax (Appeals), NFAC is not justified in holding that the amendment made by insertion of Explanation 2 to the provisions of section 36(1)(va) of the Act and the insertion of Explanation 5 to section 43B of the Act by the Finance Act, 2021 with effect from ... against the disallowance on account of delayed payment of employees’ contribution to Provident Fund (P.F) and Employees State Insurance Corporation (E.S.I.C) under section 36(1)(va) of the Act. 5. The brief facts of the case as emanating from the record, are: The assessee is a closely held public limited

Apostle Trading Consultants P.Ltd, New Delhi vs. DCIT, Circle-3(1), New Delhi

In the result, appeal filed by the Assessee stands allowed for statistical purpose

ITA 2484/DEL/2018[2014-15]Status: DisposedITAT Delhi27 Jun 2023AY 2014-15

Bench: Sh. Anil Chaturvedi, Hon’Blesh. N.K. Choudhry, Hon'Bleapostle Trading Consultants Private Vs. Dcit – Circle – 3(1) Limited New Delhi B-304, New Friends Colony New Delhi - 110065 Pan: Aahca2341Q

Section 250

Assessee without any delay repaid the loan of „Yes Bank‟ availed for the said purpose and according to the provisions of section 36(1)(iii) of the Act, the Assessee claimed the interest paid on „yes bank‟ loan, in its return of income. However, the same was disallowed ... FDPL are also at different places. Merely because MoU was not registered and unstamped, the disallowance of interest expenses under the provisions of section 36(1)(iii) is not warranted, as the prime and basic condition of section 36(1)(iii) is that the interest should be paid on capital