“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)

Macrotech Developers Ltd.(Successor to Bellissimo Crown Buildmart Pvt Ltd., Mumbai vs. DCIT Central Circle 7(3), Mumbai

The appeal is allowed

ITA 2266/MUM/2022[2017-18]Status: DisposedITAT Mumbai17 Apr 2023AY 2017-18

Bench: Shri Prashant Maharishi, Am & Shri Pavan Kumar Gadale, Jm

For Appellant: Shri Vijay Mehta, ARFor Respondent: Shri Manoj Kumar, CIT DR

Section 115JSection 14ASection 928Section 92B

IN THE INCOME TAX APPELLATE TRIBUNAL “J” BENCH, MUMBAI BEFORE SHRI PRASHANT MAHARISHI, AM AND SHRI PAVAN KUMAR GADALE, JM

Macrotech Developrs Ltd, Mumbai vs. Dy Commissioner of Income Tax, Central Circle 7(3), Mumbai

The appeal is allowed

ITA 2239/MUM/2022[2018-19]Status: DisposedITAT Mumbai17 Apr 2023AY 2018-19

Bench: Shri Prashant Maharishi, Am & Shri Pavan Kumar Gadale, Jm

For Appellant: Shri Vijay Mehta, ARFor Respondent: Shri Manoj Kumar, CIT DR

Section 115JSection 14ASection 928Section 92B

IN THE INCOME TAX APPELLATE TRIBUNAL “J” BENCH, MUMBAI BEFORE SHRI PRASHANT MAHARISHI, AM AND SHRI PAVAN KUMAR GADALE, JM

Assistant Commissioner of Income Tax (Circle)-6(2)(2), Mumbai vs. Essel Corporate Resources Private Limited, Mumbai

In the result, both the appeals of the revenue are dismissed

ITA 4322/MUM/2017[2012-13]Status: DisposedITAT Mumbai17 Apr 2023AY 2012-13

Bench: Shri M Balaganesh, Am & Shri Pavan Kumar Gadale, Jm आयकरअपीलसं./ I.T.A. No. 4322/Mum/2017 (निर्धारणवर्ा / Assessment Year: 2012-13) आयकरअपीलसं./ I.T.A. No. 3317/Mum/2017 (निर्धारणवर्ा / Assessment Year: 2012-13)

For Appellant: Shri Manoj Kumar, CIT-For Respondent: Shri Madhur Aggarwal, AR

Section 143(3)Section 14ASection 153Section 153(1)(a)Section 154Section 36(1)(iii)Section 37Section 68Section 90

IN THE INCOME TAX APPELLATE TRIBUNAL “E” BENCH, MUMBAI BEFORE SHRI M BALAGANESH, AM, & SHRI PAVAN KUMAR GADALE, JM आयकरअपीलसं

DCIT 6(2)(2), Mumbai vs. Essel Corporate Resources P.Ltd, Mumbai

In the result, both the appeals of the revenue are dismissed

ITA 3317/MUM/2017[2012-13]Status: DisposedITAT Mumbai17 Apr 2023AY 2012-13

For Appellant: Shri Manoj Kumar, CIT-For Respondent: Shri Madhur Aggarwal, AR

Section 143(3)Section 14ASection 153Section 153(1)(a)Section 154Section 36(1)(iii)Section 37Section 68Section 90

IN THE INCOME TAX APPELLATE TRIBUNAL “E” BENCH, MUMBAI BEFORE SHRI M BALAGANESH, AM, & SHRI PAVAN KUMAR GADALE, JM आयकरअपीलसं

Avi Global Plast Pvt. Ltd., Daman & Diu (Ut) vs. Assistant Commissioner of Income Tax, Vapi Circle, Vapi

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

ITA 300/SRT/2022[2017-18]Status: DisposedITAT Surat17 Apr 2023AY 2017-18

Bench: Shri Pawan Singh, Jm & Dr. A. L. Saini, Am आयकर अपील सं./Ita No.300/Srt/2022 "नधा"रण वष"/Assessment Year: (2017-18) (Virtual Court Hearing) Avi Global Plast Pvt. Ltd., Vs. The Acit, Vapi Circle, Survey No.266/4, 266/5, 266/6, 268/1, Vapi. 269/4, Village – Dunitha Bhenslore Nani Daman – 396210, Damand & Diu (Ut), India. (Appellant) (Respondent) "थायीलेखासं./जीआइआरसं./Pan/Gir No.: Aabcc5843R

Section 142(1)Section 143(2)Section 143(3)

made in the books of accounts with documentary evidences. ITA 300/SRT/2022/AY.2017-18 Avi Global Plast Pvt. Ltd. 10. In rebuttal, Ld. Counsel submitted that section 36(1)(iii) of the Act clearly says that any interest on the loan taken for acquisition of capital asset are be capitalized till the asset

Smt. Leela Devi Sankhlecha, Jodhpur vs. ITO, Ward-3(4), Jodhpur

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

ITA 64/JODH/2018[2009-10]Status: DisposedITAT Jodhpur13 Apr 2023AY 2009-10

Bench: Shri B. R. Baskaran & Dr. S. Seethalakshmismt. Leela Devi Sankhlecha Vs The Ito C-133, Kamla Nehru Nagar Ward 3(4) X-1, Jodhpur Jodhpur (Appellant) (Respondent) Pan No. Aobps 7384 G

Section 143(3)Section 14ASection 234BSection 244A

section 14A are not applicable in the case of the appellant as the expenditure of interest on borrowed funds is allowable under section 36(1)(iii) of the Act. I find no force in this claim of the appellant. My Id. Predecessor vide his order dated

DCIT, Circle-19(1), New Delhi vs. Priapus Developers Private Limited, New Delhi

In the result, appeal filed by the Revenue is dismissed

ITA 363/DEL/2021[2017-18]Status: DisposedITAT Delhi11 Apr 2023AY 2017-18

Bench: Shri G. S. Pannua N D Shri Challa Nagendra Prasad

For Appellant: C. A

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

hereinafter 1 I.T.A. No. 363/Del/2021 referred to CIT (Appeals)] New Delhi, dated 17.09.2020 in deleting the disallowance under section 14A and disallowance under section 36(1)(iii) of the Income Tax Act, 1961 (the Act) for assessment year 2017-18. 2. The ld. Counsel for the assessee submits that both ... orders of the Tribunal for the earlier assessment years deleted the disallowance made under section 14A and also the disallowance made under section 36(1)(iii) of the Act. 3. The ld. DR fairly submits that the Tribunal has decided the issue in favour of the assessee in earlier assessment

ACIT, Ratlam vs. M/S Shirani Automotives Pvt. Ltd, Ratlam Mp

ITA 555/IND/2018[2014-15]Status: DisposedITAT Indore31 Mar 2023AY 2014-15

Bench: Shri Vijay Pal Rao & Shri B.M. Biyaniassessment Year: 2014-15 Acit, M/S. Shirani Automotive Ratlam P. Ltd. बनाम/ 29, Shirani Pura, Vs. Ratlam (Appellant / Revenue) (Respondent / Assessee) Pan: Aancs 1007 M Revenue By Shri P.K. Mishra, Cit-Dr Assessee By None Date Of Hearing 02.03.2023 Date Of Pronouncement 31.03.2023

Section 143(3)Section 2(22)(e)Section 36

आयकर अपीलीय अिधकरण, इंदौर "ायपीठ, इंदौर IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI VIJAY PAL RAO

Shri Surinder Singh Bhatia, Indore vs. The JCIT Range-3, Indore

Appeals are allowed/statistically allowed in terms indicated above

ITA 774/IND/2016[2011-12]Status: DisposedITAT Indore31 Mar 2023AY 2011-12

Bench: Ms. Suchitra Kamble & Shri B.M. Biyani(Conducted Through Virtual Court) Assessment Year: 2010-11 &

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

case the Ld. CIT has erred in confirming an addition of Rs.12,44,569/- out of interest paid, by invoking provision of section 36(1)(iii) of the IT Act 1961.” Ground No. 1: 4. This ground relates to the adhoc disallowance of Rs. 2,33,720/- made ... holding as under: “8. Ground no.4 of appeal is against disallowance of Rs.12,44,569/- out of interest paid by invoking provisions of section 36(1)(iii) of the Income Tax Act, 1961. The AO observed that appellant has charged interest on “Advance given” at only 4 to 6% while

Shri Surinder Singh Bhatia, Indore vs. The JCIT- 3, Indore

Appeals are allowed/statistically allowed in terms indicated above

ITA 129/IND/2015[2010-11]Status: DisposedITAT Indore31 Mar 2023AY 2010-11

Bench: Ms. Suchitra Kamble & Shri B.M. Biyani(Conducted Through Virtual Court) Assessment Year: 2010-11 &

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

M/S. Ecoplast Ltd., Valsad vs. Asst. Cmmissioner of Income Tax, Valsad Renge, Valsad

In the result, appeal filed by the assessee is allowed

ITA 545/SRT/2019[2016-17]Status: DisposedITAT Surat30 Mar 2023AY 2016-17

Bench: Shri Pawan Singh, Jm & Dr. A. L. Saini, Am आयकर अपील सं./Ita No.545/Srt/2019 "नधा"रण वष"/Assessment Year: (2016-17) (Physical Court Hearing) Ecoplast Ltd., Vs. The Acit, Valsad Circle, S No.309, National Highway No.8, Valsad. Water Works Cross Road, Abrama, Valsad – 396002. (Assessee) (Respondent) "थायीलेखासं./जीआइआरसं./Pan/Gir No.: Aaace5030H

Section 142(1)Section 143(1)Section 143(2)Section 143(3)Section 36(1)(iii)

need to borrow the loan from banks on long term and short term finance. Therefore, Assessing Officer held that the provisions of section 36(1)(iii) of the IT Act is clearly attracted in the case of assessee. Accordingly, a proportionate disallowance which worked out to Rs.47,82,612/- being

Parshwa Print Pack Pvt. Ltd., Wadhwan vs. The Assistant Commr. Income Tax, Surendranagar Circle, Surendranagar

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

ITA 311/RJT/2015[2010-11]Status: DisposedITAT Rajkot29 Mar 2023AY 2010-11

Bench: Ms. Suchitra Kamble & Shri Waseem Ahmed

For Appellant: Shri Parth Mehta, A.RFor Respondent: Shri B. D. Gupta, Sr. DR

Section 131(1)Section 133(6)Section 143(3)Section 36(1)(iii)Section 37(1)

disallowed the interest paid on the amounts borrowed to the tune of Rs.2,52,000/- without even referring to the provision of the section 36(1)(iii) of the act. The same may be allowed by your honor now. 5) The appellant reserves the right to add amend, alter, delete

Parshwa Print Pack Pvt. Ltd., Wadhwan vs. The Assistant Commr. Income Tax, Surendranagar Circle, Surendranagar

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

ITA 310/RJT/2015[2005-06]Status: DisposedITAT Rajkot29 Mar 2023AY 2005-06

Bench: Ms. Suchitra Kamble & Shri Waseem Ahmed

For Appellant: Shri Parth Mehta, A.RFor Respondent: Shri B. D. Gupta, Sr. DR

Section 131(1)Section 133(6)Section 143(3)Section 36(1)(iii)Section 37(1)

Parshwa Printpack Pvt. Ltd., Surendranagar vs. The Deputy Commissioner of Income Tax, Circle, Surendranagar

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

ITA 248/RJT/2013[2009-10]Status: DisposedITAT Rajkot29 Mar 2023AY 2009-10

Bench: Ms. Suchitra Kamble & Shri Waseem Ahmed

For Appellant: Shri Parth Mehta, A.RFor Respondent: Shri B. D. Gupta, Sr. DR

Section 131(1)Section 133(6)Section 143(3)Section 36(1)(iii)Section 37(1)

Shri Shri Sushil Kumar Agrawal, Korba, Korba(Cg) vs. The Joint Commissioner of Income Tax, Range Korba, Korba(Cg)

In the result, appeal of the assesee in ITA No

ITA 94/BIL/2017[2011-12]Status: DisposedITAT Raipur27 Mar 2023AY 2011-12

Bench: Shri Ravish Sood & Shri Arun Khodpiaआयकर अपील सं. / Ita Nos. 93 & 94/Rpr/2017 "नधा"रण वष" / Assessment Years: 2010-11 & 2011-12 Shri Sushil Kumar Agrawal, Prop. Of M/S. Shrikishan & Co., T.P Nagar, Korba (C.G.) Pan : Acgpa4350B .......अपीलाथ"/Appellant बनाम / V/S. The Joint Commissioner Of Income Tax, Korba (C.G.) ……""यथ" / Respondent

For Appellant: Shri Y.K Mishra, AdvocateFor Respondent: Shri Choudhary N.C Roy, Sr. DR

Section 143(1)Section 143(2)Section 143(3)Section 14ASection 234BSection 40Section 68

आयकर अपील"य अ"धकरण "यायपीठ रायपुर म"। IN THE INCOME TAX APPELLATE TRIBUNAL, RAIPUR BENCH, RAIPUR BEFORE SHRI RAVISH

Shri Shri Sushil Kumar Agrawal, Korba, Korba(Cg) vs. The Joint Commissioner of Income Tax, Range Korba, Korba(Cg)

In the result, appeal of the assesee in ITA No

ITA 93/BIL/2017[2010-11]Status: DisposedITAT Raipur27 Mar 2023AY 2010-11

For Appellant: Shri Y.K Mishra, AdvocateFor Respondent: Shri Choudhary N.C Roy, Sr. DR

Section 143(1)Section 143(2)Section 143(3)Section 14ASection 234BSection 40Section 68

आयकर अपील"य अ"धकरण "यायपीठ रायपुर म"। IN THE INCOME TAX APPELLATE TRIBUNAL, RAIPUR BENCH, RAIPUR BEFORE SHRI RAVISH

Udaipur Sahakari Uphokta Thok Bhandar Ltd., Udaipur vs. ACIT, Circle-2, Udaipur

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

ITA 441/JODH/2018[2014-15]Status: DisposedITAT Jodhpur22 Mar 2023AY 2014-15

Bench: Shri Kul Bharat & Shri Manish Borad441/Jodh/2018 (Assessment Year- 2014-15) Udaipur Sahakari Upbhokta Vs The Acit Thok Bhandar Ltd. Circle-2 Ist Floor, Shastri Circle, Uddaipur Udaipur (Appellant) (Respondent) Pan No. Aaaau 0159 K

Section 143(2)Section 36(1)(iii)

first instalment of loan for the purpose for which loan was sanctioned, subsequent instalments would not have been sanctioned. 10.2 The proviso to section 36(1)(iii), as applicable in the year under appeal, reads as under:- 5 UDAIPUR SAHAKARI UPBHOKTA THOK BHANDAR LTD VS ACIT, CIRCLE-2, UDAIPUR ‘’Provided ... date on which asset was first put to use shall not be allowed as deduction.’’ Thus, as per the above proviso to section 36(1)(iii), the interest paid in respect of capital borrowed for acquisition of an asset for extension of existing business or profession, is not allowable

M/S. Asean Box Corporation, Gandhidham - Kutch vs. The Pr. CIT-1, Rajkot

The appeal of the assessee is allowed

ITA 118/RJT/2022[2017-18]Status: DisposedITAT Rajkot22 Mar 2023AY 2017-18

Bench: Shri Waseem Ahmed & Shri Siddhartha Nautiyal

For Appellant: Shri Vimal Desai, A.RFor Respondent: Shri Shramdeep Sinha, CIT DR

Section 142(1)Section 143(3)Section 263Section 57

with the day-to-day working capital requirements of the business and other business purposes. Therefore, the said interest expenditure is allowable under Section 36(1)(iii) of the Act. However, in the return of income the assessee has inadvertently claimed interest of Rs. 85.40 lakhs on unsecured loans under ... immediately preceding year and after carrying out due verification, the Ld. AO allowed the claim of deduction of interest on unsecured loans under Section 36(1)(iii) of the Act. Accordingly, the Counsel for the assessee had submitted before the A.O. that though the interest expenditure of Rs. 85.40 lakhs

ACIT, Circle- 5(1), New Delhi vs. Blue Coast Hotels Ltd., New Delhi

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

ITA 287/DEL/2020[2016-17]Status: DisposedITAT Delhi17 Mar 2023AY 2016-17

Bench: Shri C.M. Garg & Shri Pradip Kumar Kediaassessment Year: 2016-17 Acit, Vs. Blue Coast Hotels Ltd., Circle-5(1), 415-417, Antriksh Bhawan, New Delhi. 22, Kg Marg, New Delhi. Pan: Aaacm0037G (Appellant) (Respondent) Assessee By : Shri Ved Jain, Advocate & Shri Aman Garg, Ca Revenue By : Shri P. Praveen Sidharth, Cit, Dr Date Of Hearing : 16.01.2023 Date Of Pronouncement : 17.03.2023 Order Per C.M. Garg, Jm: This Appeal Filed By The Revenue Is Directed Against The Order Of The Cit(A)-2, New Delhi, Dated 21.10.2019, For Assessment Year 2016-17. 2. The Revenue Has Raised The Following Grounds Of Appeal:- “1. Whether On The Facts & In The Circumstances Of The Case & In Law, Whether The Ld Cit(A) Has Erred In Not Appreciating The Fact That There Was No Commercial Expediency Due To Which The Assessee Had Granted Interest Free Loans To Its Subsidiaries & Bore The Burden Of Interest For Their Sake. 2. Whether On The Facts & In The Circumstances Of The Case & In Law, Whether The Ld Cit(A) Has Erred In Deleting The Addition Of Rs.10,20,24,116/- Made U/S 14A Of The It Act, 1961 Without Appreciating The Facts Mentioned By The Ao For Disallowing Such Amount On The

For Appellant: Shri Ved Jain, Advocate &For Respondent: Shri P. Praveen Sidharth, CIT, DR

Section 14ASection 36(1)(iii)Section 43B

were enjoying interest free funds and the assessee was bearing the burden of interest for their sake which is against the provisions of section 36(1)(iii) of the Income-tax Act, 1961 (for short, ‘the Act’). Therefore, the AO was right in making disallowance of interest by taking

ACIT, Circle- 15(2), New Delhi vs. Logix Infra Developers (P) Ltd., New Delhi

In the result, appeal of the Revenue is dismissed

ITA 5400/DEL/2019[2013-14]Status: DisposedITAT Delhi17 Mar 2023AY 2013-14

Bench: Shri Anil Chaturvedi & Shri N.K. Choudhry

For Appellant: Ms. Shweta Bansal, CAFor Respondent: Ms. Sarita Kumari, CIT-DR

Section 143(3)

which has been capitalized. Since, the interest is attributable to the cost of land, the interest expenditure is not allowable as per Section 36(1)(iii) o f the Income Tax Act, 1961. Similarly, the registration charges and the fee/penalty/damages/price for late registration amounts to an integral part of cost