“Section 36(1)(iii)”

Section References (mined)Section 36Section 36(1)(iii)1,547 judgments

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

Leading authorities on Section 36(1)(iii)

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.

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.

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.

Maxopp Investment Ltd. v. CIT

347 ITR 272 · 2012 · High Court

516

citing judgments

Disallowance under Section 14A cannot exceed the exempt income earned. The Assessing Officer must record satisfaction regarding the assessee's accounts before making any disallowance.

South Indian Bank Ltd. v. CIT

438 ITR 1 · 2021 · Supreme Court

508

citing judgments

The mixed fund theory is affirmed, holding that no disallowance of interest expenditure under Section 14A can be made if the assessee possesses sufficient non-interest bearing funds, such as capital and reserves, to cover investments made in tax-free securities.

CIT v. Reliance Industries Ltd.

410 ITR 466 · 2019 · Supreme Court

501

citing judgments

When mixed funds are available, interest-free advances are presumed to be made from the assessee's own interest-free funds, preventing disallowance of interest expenditure under section 36(1)(iii). This principle also applies to section 14A disallowance, where interest expenditure is not disallowed if surplus funds are available and no direct nexus is established with borrowed funds for investments earning exempt income.

CIT v. Dalmia Cement (Bharat) Ltd.

254 ITR 377 · 2002 · High Court

417

citing judgments

When there is a nexus between an expenditure and the purpose of business, incurred on grounds of commercial expediency, the Revenue cannot question its reasonableness or assume the role of the businessman to compel profit maximization. This principle applies even if the business is not that of the assessee itself.

HDFC Bank Ltd. v. DCIT

383 ITR 529 · 2016 · High Court

408

citing judgments

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.

Judgments citing Section 36(1)(iii)

ACIT-2(3)(1), Mumbai vs. Hdfc Bank Ltd ( Merged Entity Hdfc Investments Limited ), Mumbai

ITA 2980/MUM/2024[2014-15]Status: DisposedITAT Mumbai28 Jan 2025AY 2014-15

Bench: Shri Anikesh Banerjee & Shri Girish Agrawal

For Appellant: Shri Nitesh Joshi, Advocate a

IN THE INCOME TAX APPELLATE TRIBUNAL “E” BENCH MUMBAI BEFORE SHRI ANIKESH BANERJEE, JUDICIAL MEMBER AND SHRI GIRISH AGRAWAL, ACCOUNTANT

Hdfc Bank Limited (As Successor to Housing Development Finance Corporation Ltd.), Mumbai vs. DCIT, Range-1(1)(2), Mumbai

ITA 1890/MUM/2023[2016-17]Status: DisposedITAT Mumbai28 Jan 2025AY 2016-17

Bench: Shri Anikesh Banerjee & Shri Girish Agrawal

For Appellant: Shri Nitesh Joshi

IN THE INCOME TAX APPELLATE TRIBUNAL “E” BENCH MUMBAI BEFORE SHRI ANIKESH BANERJEE, JUDICIAL MEMBER AND SHRI GIRISH AGRAWAL, ACCOUNTANT

Addl CIT RG 1(1), Mumbai vs. Hdfc Ltd, Mumbai

ITA 5707/MUM/2010[2006-07]Status: DisposedITAT Mumbai28 Jan 2025AY 2006-07

Bench: Shri Anikesh Banerjee & Shri Girish Agrawal

For Appellant: Shri Nitesh Joshi, Advocat

IN THE INCOME TAX APPELLATE TRIBUNAL “E” BENCH MUMBAI BEFORE SHRI ANIKESH BANERJEE, JUDICIAL MEMBER AND SHRI GIRISH AGRAWAL, ACCOUNTANT

Jitendra Prakashchandra Shah, Ahmedabad vs. ACIT, Circle-1(1)(1), Ahmedabad

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

ITA 1083/AHD/2024[2018-19]Status: DisposedITAT Ahmedabad24 Jan 2025AY 2018-19

Bench: Dr. Brr Kumar & Shri Siddhartha Nautiyal

For Appellant: Shri Anil Kshtriya, A.RFor Respondent: Shri B.P. Srivastava, Sr. DR

Section 36(1)(iii)Section 57

with respect to interest expenses amounting to Rs. 59,25,359/-, which as per the assessee should have been claimed under Section 36(1)(iii) of the Act, as business expenses. This, according to the assessee, was an error on the part of the assessee and he submitted that only ... been wrongly claimed against “income from other sources”, instead of making such claim under the head “income from business or profession” under Section 36(1)(iii) of the Act since the same has been incurred for the purpose of business and profession. The remaining expenditure

DCIT Cen Cir 1(4), Mumbai vs. Essel Mining & Industries Ltd, Kolkatta

In the result, the appeals filed by the Revenue are dismissed and appeals filed by the Assessee are partly allowed

ITA 480/MUM/2017[2012-13]Status: DisposedITAT Kolkata23 Jan 2025AY 2012-13

Section 10BSection 143(3)Section 14ASection 250Section 801A

IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH KOLKATA SHRI SANJAY GARG, JUDICIAL MEMBER SHRI SANJAY AWASTHI, ACCOUNTANT MEMBER I.T.A

Essel Mining & Industries Limited, Kolkatta vs. DCIT Central Circle - 1(4), Mumbai

In the result, the appeals filed by the Revenue are dismissed and appeals filed by the Assessee are partly allowed

ITA 2430/KOL/2016[2012-13]Status: DisposedITAT Kolkata23 Jan 2025AY 2012-13

Bench: SHRI SANJAY GARG, JUDICIAL MEMBER SHRI SANJAY AWASTHI (Accountant Member)

Section 10BSection 143(3)Section 14ASection 250Section 801A

IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH KOLKATA SHRI SANJAY GARG, JUDICIAL MEMBER SHRI SANJAY AWASTHI, ACCOUNTANT MEMBER I.T.A

DCIT Cen Cir 1(4), Mumbai vs. Essel Mining & Industries Ltd, Kolkatta

In the result, the appeals filed by the Revenue are dismissed and appeals filed by the Assessee are partly allowed

ITA 373/MUM/2015[2011-12]Status: DisposedITAT Kolkata23 Jan 2025AY 2011-12

Bench: SHRI SANJAY GARG, JUDICIAL MEMBER SHRI SANJAY AWASTHI (Accountant Member)

Section 10BSection 143(3)Section 14ASection 250Section 801A

IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH KOLKATA SHRI SANJAY GARG, JUDICIAL MEMBER SHRI SANJAY AWASTHI, ACCOUNTANT MEMBER I.T.A

Essel Mining & Industries Limited, Kolkata vs. DCIT, Circle-5, Kolkata

In the result, the appeals filed by the Revenue are dismissed and appeals filed by the Assessee are partly allowed

ITA 2092/KOL/2014[2011-2012]Status: DisposedITAT Kolkata23 Jan 2025AY 2011-2012

Bench: SHRI SANJAY GARG, JUDICIAL MEMBER SHRI SANJAY AWASTHI (Accountant Member)

Section 10BSection 143(3)Section 14ASection 250Section 801A

IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH KOLKATA SHRI SANJAY GARG, JUDICIAL MEMBER SHRI SANJAY AWASTHI, ACCOUNTANT MEMBER I.T.A

Manish Ranjan DCIT Central Circle-1(2) Ahmedabad, Ashram Road vs. Oswal Extrusion Limited, Ushmanpura

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

ITA 642/AHD/2024[2016-17]Status: DisposedITAT Ahmedabad22 Jan 2025AY 2016-17

Bench: Dr. Brr Kumar & Shri Siddhartha Nautiyal

For Appellant: Shri B.P. Srivastava, Sr. D.RFor Respondent: Ms. Astha Maniar, A.R

Section 36(1)(iii)

Infrastructure Ltd. and accordingly, debited interest expenditure of Rs. 933.52 lakhs in the Profit & Loss Account. The Assessing Officer held that as per Section 36(1)(iii) of the Act, deduction for interest paid in respect of capital borrowed is allowable only if borrowed fund has been utilized ... Infrastructure Ltd. Therefore, the Assessing Officer made disallowance of proportionate interest @ 12% of interest free advances of Rs. 30,50,00,000/- under Section 36(1)(iii) of the Act, amounting to Rs. 33,66,00,000/- on account of interest bearing funds being utilized for non-business purposes

Deputy Commissioner of Income Tax 13(1)(2), Mumbai vs. Olive Bar & Kitchen Private Limited, Mumbai

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

ITA 6255/MUM/2024[2017-18]Status: DisposedITAT Mumbai22 Jan 2025AY 2017-18

Bench: Shri Amit Shukla & Smt. Renu Jauhriolive Bar & Kitchen Pvt. V/S. Acit, Circle-13(1)(1), बनाम Ltd. Mumbai 14 Union Park, Palli Hill Maharashtra-400020 Tourist Hotel Pvt. Ltd, Palli Hill Road, Khar West, Mumbai-400052 स्थायी लेखा सं./जीआइआर सं./Pan/Gir No: Aaaco5346G Appellant/अपीलार्थी .. Respondent/प्रतिवादी Dcit, Circle-13(1)(2), V/S. Olive Bar & Kitchen Pvt. Mumbai बनाम Ltd. R. No. 218, Aayakar 14 Union Park, Palli Hill Bhavan, M K Road, Tourist Hotel Pvt. Ltd, Mumbai, Palli Hill Road, Khar West, Maharashtra-400020 Mumbai-400052 स्थायी लेखा सं./जीआइआर सं./Pan/Gir No: Aaaco5346G Appellant/अपीलार्थी Respondent/प्रतिवादी ..

For Appellant: Shri Mahesh RajoraFor Respondent: Shri Mahesh Pmnani

Section 250Section 35D(1)(ii)Section 36(1)(iii)Section 36(1)(lit)Section 37(1)

assessee to establish that the advancing interest free loans to sister concerns falls within the purview of business activities within the meaning of section 36(1)(iii) of the Income Tax Act, 1961. 4. On the facts and circumstances of the case and in law, the CIT(A) erred

Olive Bar and Kitchen Private Limited, Mumbai vs. Assistant Commissioner of Income Tax, Circle - 13(1)(1), Mumbai

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

ITA 5924/MUM/2024[2017-18]Status: DisposedITAT Mumbai22 Jan 2025AY 2017-18

For Appellant: Shri Mahesh RajoraFor Respondent: Shri Mahesh Pmnani

Section 250Section 35D(1)(ii)Section 36(1)(iii)Section 36(1)(lit)Section 37(1)

Sew Krishnagar Baharampore Highways Limited, Hyderabad vs. DCIT., Circle-3(1), Hyderabad

In the result, appeal filed by the assessee is allowed

ITA 193/HYD/2024[2020-21]Status: DisposedITAT Hyderabad21 Jan 2025AY 2020-21

Bench: Shri Laliet Kumar & Shri Manjunatha G.आ.अपी.सं /Ita No.193/Hyd/2024 (निर्धारण वर्ा/Assessment Year: 2020-21) Sew Krishnagar Vs. Dcit, Circle-3(1) Baharampore Highways Hyderabad Limited Hyderabad [Pan :Aapcs5143Q] (Appellant) (Respondent) निर्धाररती द्वधरध/Assessee By: Shri M.V. Prasad & Shri K.Rajendra Kumar, Ar रधजस् व द्वधरध/Revenue By: Ms.M.Narmada, Cit-Dr सुिवधई की तधरीख/Date Of Hearing: 21/01/2025 घोर्णध की तधरीख/Date Of 21/01/2025 Pronouncement: आदेश / Order Per. Manjunatha G., A.M: This Appeal Filed By The Assessee Is Directed Against The Order Dated 21.12.2023 Of The Learned Commissioner Of Income Tax (Appeals) [Ld.Cit(A)], National Faceless Appeal Centre (Nfac), Hyderabad, Pertaining To A.Y.2020-21. 2. The Appeal Filed By The Assessee Is Barred By Limitation By 9 Days. It Has Moved A Condonation Petition Explaining Reasons Thereof. We Have Heard Both The Parties & Having Regard To The Reasons Given In The Petition, We Condone The Delay & Admit The Appeal For Hearing.

For Appellant: Shri M.V. Prasad &For Respondent: Ms.M.Narmada, CIT-DR

Section 143(1)Section 145(2)Section 154Section 21Section 36(1)(iii)Section 36(1)(viii)

also reported interest debited to P&L account once again at clause 21(i) of the Tax Audit Report, as amount admissible under section 36(1)(iii) of the Act. The assessee has disallowed and added back total interest expenditure of Rs.137.87 crores to the total income. The CPC processed ... under clause 13(e) under ICDS adjustments and another in clause 21(i) as the ‘amount inadmissible under the proviso to section 36(1)(iii) of the Act’. Since the assessee has filed relevant evidences and proved that the disallowance made by the Assessing Officer towards interest expenditure u/s 36

Maithan Alloys Ltd, Kolkata vs. DCIT, Cir. 1(1), Kolkata

In the result, the appeals of the assessee are partly allowed

ITA 544/KOL/2024[2014-15]Status: DisposedITAT Kolkata21 Jan 2025AY 2014-15

Bench: Shri Rajesh Kumar, Am & Shri Pradip Kumar Choubey, Jm

Section 143(3)Section 14ASection 36(1)(iii)

IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, KOLKATA BEFORE SHRI RAJESH KUMAR, AM AND SHRI PRADIP KUMAR CHOUBEY, JM

Maithan Alloys Ltd, Kolkata vs. DCIT, Cir. 1(1), Kolkata

In the result, the appeals of the assessee are partly allowed

ITA 543/KOL/2024[2011-12]Status: DisposedITAT Kolkata21 Jan 2025AY 2011-12

Bench: Shri Rajesh Kumar, Am & Shri Pradip Kumar Choubey, Jm

For Appellant: Shri Sidhhrath Kejriwal, ARFor Respondent: Shri Abhishek Kumar, DR

Section 143(3)Section 14ASection 36(1)(iii)

IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, KOLKATA BEFORE SHRI RAJESH KUMAR, AM AND SHRI PRADIP KUMAR CHOUBEY, JM

Growmore Research and Assets Management, Mumbai vs. DCIT, CC-4(1) (Erstwhile DCIT-31, Mumbai

In the result, both the appeals are treated as partly allowed

ITA 453/MUM/2023[1992-93]Status: DisposedITAT Mumbai21 Jan 2025AY 1992-93

Bench: Shri B.R. Baskaran & Shri Anikesh Banerjee

For Appellant: Shri Vijay Mehta and ShriDharmeshFor Respondent: Dr.P. Daniel – Spl. Counsel

Section 144

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI “G” BENCH : MUMBAI BEFORE SHRI B.R. BASKARAN, ACCOUNTANT MEMBER AND SHRI ANIKESH BANERJEE

Deputy Commissioner of Income Tax, Circle- 1, Thane, Wagle Industrial Estate, Ashar It Park, Thane West vs. Aplab Limited, Digha Navi Mumbai

In the result, the appeal of the revenue is partly allowed

ITA 3166/MUM/2024[2011-12]Status: DisposedITAT Mumbai20 Jan 2025AY 2011-12

Bench: Shri Saktijit Dey & Smt. Renu Jauhri

For Appellant: Shri M. SubramaniamFor Respondent: Shri Ram Krishn Kedia

Section 250Section 35Section 36(1)Section 36(1)(iii)Section 68Section 69C

disallowed the interest presuming that the assessee has also taken loans on which it was paying interest, and therefore, provisions of section 36(1)(iii) were applicable. Ld. AO, therefore, disallowed the claim of interest of loans and advances to the extent of interest free funds provided to its sister

ACIT-3(4), Mumbai vs. Union Bank of India ( Erstwhile Corporation Bank), Mumbai

In the result both the appeals filed by the revenue are partly allowed

ITA 1228/MUM/2024[2020-21]Status: DisposedITAT Mumbai20 Jan 2025AY 2020-21

Bench: Shri.B.R. Baskaran & Shri Anikesh Banerjee

For Appellant: Shri Ananthan S / Ms. LalithaFor Respondent: ShriAshish Heliwal, CIT DR

Section 115JSection 143(3)Section 14ASection 250Section 251(1)(a)Section 36Section 36(1)(iii)Section 36(1)(vii)Section 36(1)(viia)

Debt Instruments (IPDI) Bond amount to Rs.70,63,35,532/-. The Ld.AO held that the said interest is not admissible for deduction under section 36(1)(iii) for the reason that the bonds are (a) perpetual nature; (b) high loss absorption capacity – provision for write down of principal; or conversion ... pertains to the treatment of interest on Perpetual Bonds, specifically Innovative Perpetual Debt Instruments (IPDI), and whether such interest qualifies for deduction under Section 36(1)(iii) of the Act. In the present case, we have followed the order of the co-ordinate bench of the ITAT, Mumbai Bench

Shell & Pearl Porcellano Limited, Ahmedabad vs. The ITO, Ward-4(1)(3), Ahmedabad

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

ITA 2851/AHD/2017[2012-13]Status: DisposedITAT Ahmedabad17 Jan 2025AY 2012-13

Bench: Dr. Brr Kumar & Ms Suchitra Kamblei.Ta. No.2851/Ahd/2017 (Assessment Year: 2012-13) Shell & Pearl Porcellano Limited, Vs. The Income Tax Officer, 207, Sarthik-Ii, Ward-4(1)(3), Opp. Rajpath Club, Ahmedabad. S.G Highway, Ahmedabad-380054. [Pan No.Aagcs2593B] (Appellant) .. (Respondent) Appellant By : Shri Firoj Bodla, Ar Respondent By: Shri Ap Singh, Cit. Dr 16.01.2025 Date Of Hearing Date Of Pronouncement 17.01.2025 O R D E R

For Appellant: Shri Firoj Bodla, ARFor Respondent: Shri AP Singh, CIT. DR

Section 143(1)Section 36(1)Section 36(1)(iii)Section 41(1)

confirming disallowance of interest expenses of Rs. 2,44,50,181/- on the ground that such expenses ought to have been capitalized under section 36(1)(iii). The addition confirmed by the Hon’ble CIT-A being without regard to the provisions of the section 36(1) (iii) and other

Asst. Commissioner of Income Tax- 14(1)(2), Mumbai, Aayakar Bhavan vs. T Bhimjyani Realty Private Limited, Mumbai

In the result, the appeal filed by the revenue is dismissed

ITA 4901/MUM/2024[2018-19]Status: DisposedITAT Mumbai16 Jan 2025AY 2018-19

Bench: Shri B.R. Baskaran & Shri Anikesh Banerjeea.Y : 2018-19 :

For Appellant: Shri Hemanshu Joshi, Sr. DRFor Respondent: Shri Vijay Mehta

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

High Court as well as the authorities below on the aforesaid question was not correct. In this connection we may refer to Section 36(1)(iii) of the Income Tax Act, 1961 (hereinafter referred to as the 'Act') which states that "the amount of the interest paid in respect ... measure of commercial expediency. In our opinion, the decisions relating to Section 37 of the Act will also be applicable to Section 36(1)(iii) because in Section 37 also the expression used is "for the purpose of business". It has been consistently held in decisions relating to Section

DCIT, Dehradun vs. M/S Institute of Clinical Research (India) Society, Dehradun

In the result, the appeal filed by the assessee in ITA No

ITA 3927/DEL/2012[2008-09]Status: DisposedITAT Dehradun15 Jan 2025AY 2008-09

Bench: Shri Satbeer Singh Godara & Shri Naveen Chandra

For Appellant: Dr. Rakesh Gupta, AdvFor Respondent: Shri A.S. Rana, Sr. DR

Section 11Section 13Section 36(1)(iii)Section 40A(2)Section 40A(2)(b)Section 68

amount of Rs. 1 crore holding that the interest bearing funds have been diverted for non-business purpose invoking the provisions of section 36(1)(iii) of the Act. 15. When the aggrieved assessee went in appeal before the ld. CIT(A), the ld. CIT(A) deleted the addition following