“Section 10(2)(iii)”
The decision most relied on for Section 10(2)(iii) is CIT v. Reliance Utilities & Power Ltd. (313 ITR 340), cited in 2,118 judgments on BharatTax.
Leading authorities on Section 10(2)(iii)
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.
Where an assessee has sufficient interest-free funds, investments yielding exempt income are presumed to be made out of such funds, precluding disallowance of related interest expenditure under section 14A.
If an assessee possesses sufficient interest-free funds, it is presumed that investments yielding exempt income were made from these funds, therefore disallowance of interest expenditure under Section 14A is not justified.
Charitable institutions are entitled to claim depreciation on assets even when the cost of acquisition has already been treated as an application of income for exemption purposes, as this does not constitute a double deduction.
The legal form or ostensible autonomy of an entity does not prevent it from being classified as 'State' or 'authority' under Article 12 if it functions as an instrumentality of the Government, thereby attracting constitutional accountability under Part III.
If an assessee possesses sufficient own interest-free funds to cover investments or interest-free advances, it is presumed that these were made from own funds. This presumption aids in determining the source of such advances.
Interest paid by a builder on loans for a construction project, considered as stock-in-trade, is an allowable deduction under Section 36(1)(iii) of the Act. The nature of the expense, whether capital or revenue, is irrelevant for claiming this deduction.
For claiming a deduction of interest paid on borrowed capital under Section 36(1)(iii), an assessee must show that the capital was used for business purposes; the nature of the asset acquired (revenue or capital) with such capital is irrelevant.
