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“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)

Akkavila Sajeenan Aggregates, Kollam vs. The ACIT Central Circle, Kollam

In the result, the appeals by the assessee are allowed

ITA 694/COCH/2022[2019-2020]Status: DisposedITAT Cochin20 Jan 2023AY 2019-2020

Bench: Smt. Beena Pillai & Ms. Padmavathy S.

For Appellant: Shri Surendranath Rao, CAFor Respondent: Smt. J M Jamuna Devi, Sr. AR
Section 133ASection 30Section 36(1)(iii)Section 37Section 44A

IN THE INCOME TAX APPELLATE TRIBUNAL BENCH : COCHIN BEFORE SMT. BEENA PILLAI, JUDICIAL MEMBER AND Ms. PADMAVATHY S., ACCOUNTANT MEMBER

Akkavila Sajeenan Aggregates, Kollam vs. The ACIT Central Circle, Kollam

In the result, the appeals by the assessee are allowed

ITA 693/COCH/2022[2018-2019]Status: DisposedITAT Cochin20 Jan 2023AY 2018-2019

Bench: Smt. Beena Pillai & Ms. Padmavathy S.

For Appellant: Shri Surendranath Rao, CAFor Respondent: Smt. J M Jamuna Devi, Sr. AR
Section 133ASection 30Section 36(1)(iii)Section 37Section 44A

IN THE INCOME TAX APPELLATE TRIBUNAL BENCH : COCHIN BEFORE SMT. BEENA PILLAI, JUDICIAL MEMBER AND Ms. PADMAVATHY S., ACCOUNTANT MEMBER

Jwil Infra Ltd, New Delhi vs. DCIT Circle-13(2), New Delhi

ITA 7789/DEL/2019[2014-15]Status: DisposedITAT Delhi17 Jan 2023AY 2014-15

Bench: Sh. Anil Chaturvedi & Sh. Anubhav Sharma

Section 143(3)

relevant to reproduce the observations of Supreme Court in the case of S.A.Builders (Supra) : “To consider whether one should allow deduction under section 36(1)(iii) of interest paid by the assessee on amounts borrowed by it for advancing to a sister concern, the authorities and the courts should examine

Addl. CIT, Special Range- 7, New Delhi vs. Power Links Transmission Ltd., New Delhi

In the result, the appeal filed by the Revenue Department stands dismissed

ITA 7322/DEL/2018[2015-16]Status: DisposedITAT Delhi16 Jan 2023AY 2015-16

Bench: Shri Shamim Yahya & Shri N.K. Choudhryassessment Year: 2015-16

For Appellant: Sh. Vishal Kalra, Ld. AdvFor Respondent: Sh. Vinod Kumar, Ld. CIT-DR
Section 115JSection 250(6)Section 36Section 36(1)(iii)

interest paid on account of funds utilized as investments is considered an expense not eligible to be allowed within the 3 provisions of section 36(1)(iii) of the Income Tax Act, 1961, and is disallowed being interest cost incurred for the purpose other than the purpose of business ... assessee company. Therefore, a total disallowance under section 36(1)(iii) of the Income Tax Act, 1961 is made and added back in the income of the assessee company for the assessment year 2015-16 being considered as excessive interest payment by the company on account of funds not utilized

Mitsubishi Electric Automotive, Gurgaon vs. DCIT, Circle- 2(1), Gurgaon

In the result, the appeal is partly allowed

ITA 7512/DEL/2017[2013-14]Status: DisposedITAT Delhi11 Jan 2023AY 2013-14

Bench: Shri G.S. Pannu & Shri Saktijit Deyassessment Year: 2013-14

Section 143(3)Section 144CSection 3(1)(iii)Section 43(5)

view, the nature and character of the fixed cost on foreign currency swap contract is nothing but interest, therefore, allowable under Section 36(1)(iii) of the Act. As could be seen, the Assessing Officer has refused to entertain assessee’s claim, firstly, on the ground that the amount paid ... BTMU under swap contracts is independent of the foreign currency loan, hence, cannot be treated as interest covered under Section 36(1)(iii) of the Act. Further, he has held that the amount paid to BTMU is in respect of speculative transaction under Section

M/S. Hindustan Projects, Rajkot vs. The Income Tax Officer, Ward- 2 (1) (1), Rajkot

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

ITA 416/RJT/2017[2013-14]Status: DisposedITAT Rajkot04 Jan 2023AY 2013-14

Bench: Shri Waseem Ahmed & Shri T. R. Senthil Kumar

For Appellant: Shri Rajendra Singhal, A.RFor Respondent: Shri B. D. Gupta, Sr. DR
Section 143(3)Section 234ASection 36(1)(iii)Section 68

erred on facts as well as in law by confirming the addition by Rs.12,77,083/- made by the learned Assessing Officer under section 36(1)(iii) of the I.T. Act, 1961. 5. The learned Commissioner of Income Tax (Appeals) erred on facts as well as in law in confirming

Jaya Hospitals, Warangal vs. ACIT, Circle-1, Warangal

In the result, ITA No.616/Hyd/2022 is treated as allowed for statistical purposes and ITA No

ITA 617/HYD/2022[2015-16]Status: DisposedITAT Hyderabad30 Dec 2022AY 2015-16

Bench: Shri Rama Kanta Panda & Shri K. Narasimha Chary

For Appellant: Shri K. A. Sai Prasad, CAFor Respondent: Shri Kumar Aditya
Section 37Section 40

heading “amounts not deductible” it starts with the words “notwithstanding anything to the contrary in section 30 to 38”. Thus, the provisions of section 36(1)(iii) as well as section 37 are not to be considered, when the amounts are governed by section 40. Section 40(b) is with ... interest paid at Page 4 of 9 ITA Nos.616 & 617/Hyd/2022 Rs. 5,90,785/- requires to be disallowed under the provisions of section 36(1)(iii) or not? In case, assessee has sufficiently enough funds to advance the HUF, Assessing Officer cannot disallow any amount out of the interest paid

Jaya Hospitals, Warangal vs. ITO, Ward-1, Warangal

In the result, ITA No.616/Hyd/2022 is treated as allowed for statistical purposes and ITA No

ITA 616/HYD/2022[2013-14]Status: DisposedITAT Hyderabad30 Dec 2022AY 2013-14

Bench: Shri Rama Kanta Panda & Shri K. Narasimha Chary

For Appellant: Shri K. A. Sai Prasad, CAFor Respondent: Shri Kumar Aditya
Section 37Section 40

heading “amounts not deductible” it starts with the words “notwithstanding anything to the contrary in section 30 to 38”. Thus, the provisions of section 36(1)(iii) as well as section 37 are not to be considered, when the amounts are governed by section 40. Section 40(b) is with ... interest paid at Page 4 of 9 ITA Nos.616 & 617/Hyd/2022 Rs. 5,90,785/- requires to be disallowed under the provisions of section 36(1)(iii) or not? In case, assessee has sufficiently enough funds to advance the HUF, Assessing Officer cannot disallow any amount out of the interest paid

DCIT (TDS)(OSD) - 2(3), Mumbai vs. M/S. Wockhardt Ltd., Mumbai

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

ITA 2131/MUM/2022[2014-15]Status: DisposedITAT Mumbai30 Dec 2022AY 2014-15

Bench: Shri Aby T Varkey () & Shri Om Prakash Kant () Assessment Year: 2014-15 Dcit (Tds) (Osd)-2(3), M/S Wockhardt Ltd., Room No. 310, 3Rd Floor, Mtnl Wockhardt Towers, Bandra Building, Cumballa Hill, Vs. Kurla Complex, Mumbai-400026. Mumbai-400051. Pan No. Aaacw 2472 M Appellant Respondent : Assessee By Mr. Pranay Gandhi, Ar : Revenue By Mr. Byomakesh Pradipta Kumar Panda, Cit-Dr : Date Of Hearing 20/12/2022 : Date Of Pronouncement 30/12/2022

For Respondent: Assessee by Mr. Pranay Gandhi, AR
Section 194H

controversy is that the revenue otherwise cannot allow the controversy is that the revenue otherwise cannot allow the claim of payment under section 36(1)(iii) of the Act because as claim of payment under section 36(1)(iii) of the Act because as claim of payment under section 36 ... interest sources" as also cannot be allowed as payment of interest sources" as also cannot be allowed as payment of interest under section 36(1)(iii), therefore, it's true nature is nothing but under section 36(1)(iii), therefore, it's true nature is nothing but under section 36

DCIT, Chennai vs. Siva Ventures Ltd., Chennai

The appeal of the revenue stand partly allowed in terms of our above order

ITA 1417/CHNY/2016[2008-2009]Status: DisposedITAT Chennai23 Dec 2022AY 2008-2009

Bench: Hon’Ble Shri Mahavir Singh & Hon’Ble Shri Manoj Kumar Aggarwal, Am.

For Appellant: Shri B. Ramakrishnan (CA) – Ld. ARFor Respondent: Ms. Ann L.Kapthuama (CIT) –Ld. DR
Section 143(3)Section 14ASection 250(6)

आयकर अपीलीय अिधकरण ‘डी’ "ायपीठ चे"ई म"। IN THE INCOME TAX APPELLATE TRIBUNAL ‘D’ BENCH, CHENNAI माननीय ,ी महावीर िसंह

Siva Industries and Holdings Limited, Chennai vs. DCIT, Chennai

The appeal of the revenue stand partly allowed in terms of our above order

ITA 1390/CHNY/2016[2008-09]Status: DisposedITAT Chennai23 Dec 2022AY 2008-09

Bench: Hon’Ble Shri Mahavir Singh & Hon’Ble Shri Manoj Kumar Aggarwal, Am.

For Appellant: Shri B. Ramakrishnan (CA) – Ld. ARFor Respondent: Ms. Ann L.Kapthuama (CIT) –Ld. DR
Section 143(3)Section 14ASection 250(6)

आयकर अपीलीय अिधकरण ‘डी’ "ायपीठ चे"ई म"। IN THE INCOME TAX APPELLATE TRIBUNAL ‘D’ BENCH, CHENNAI माननीय ,ी महावीर िसंह

Tata Steel Limited, Mumbai vs. The Principle Commissioner of Income Tax, Mumbai

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

ITA 1316/MUM/2022[2012-2013]Status: DisposedITAT Mumbai23 Dec 2022AY 2012-2013
Section 115JSection 143(3)Section 263Section 36(1)(iii)

option to call is not available to holders of the bonds and therefore, interest payable paid on these bonds are not allowable under section 36(1)(iii) of the Act Reliance is placed on the decision of Hon'ble Haryana High Court in the case of Pepsu Road Transport Corpn

Tata Steel Limited, Mumbai vs. The Principle Commissioner of Income Tax, Mumbai-2, Mumbai

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

ITA 1315/MUM/2022[2011-2012]Status: DisposedITAT Mumbai23 Dec 2022AY 2011-2012
Section 115JSection 143(3)Section 263Section 36(1)(iii)

option to call is not available to holders of the bonds and therefore, interest payable paid on these bonds are not allowable under section 36(1)(iii) of the Act Reliance is placed on the decision of Hon'ble Haryana High Court in the case of Pepsu Road Transport Corpn

M/S. Sahyog Homes Ltd, Mumbai vs. DCIT Cent. Cir 6(2), Mumbai

In the result, all the appeals are partly allowed

ITA 1922/MUM/2021[2014-15]Status: DisposedITAT Mumbai23 Dec 2022AY 2014-15

Bench: Shri Kuldip Singh () & Shri Rifaur Rahman (

Section 143(3)Section 37(1)Section 40

interest payment was also made under section 194A of the Act and as such the same is allowable under section 36(1)(iii) of the Act. The Ld.CIT(A) decided the issue against the assessee by returning the following finding:- “It is a fact that the advance of Rs.2

M/S. Sahyog Homes Ltd., Mumbai vs. DCIT Cent. Cir. 6(2), Mumbai

In the result, all the appeals are partly allowed

ITA 1921/MUM/2021[2013-14]Status: DisposedITAT Mumbai23 Dec 2022AY 2013-14

Bench: Shri Kuldip Singh () & Shri Rifaur Rahman (

Section 143(3)Section 37(1)Section 40

interest payment was also made under section 194A of the Act and as such the same is allowable under section 36(1)(iii) of the Act. The Ld.CIT(A) decided the issue against the assessee by returning the following finding:- “It is a fact that the advance of Rs.2

M/S. Sahyog Homes Ltd, Mumbai vs. ACIT -11(1) (2), Mumbai

In the result, all the appeals are partly allowed

ITA 1920/MUM/2021[2012-13]Status: DisposedITAT Mumbai23 Dec 2022AY 2012-13

Bench: Shri Kuldip Singh () & Shri Rifaur Rahman (

Section 143(3)Section 37(1)Section 40

interest payment was also made under section 194A of the Act and as such the same is allowable under section 36(1)(iii) of the Act. The Ld.CIT(A) decided the issue against the assessee by returning the following finding:- “It is a fact that the advance of Rs.2

M/S. Sahyog Homes Ltd, Mumbai vs. DCIT Cent. Cir 6(2), Mumbai

In the result, all the appeals are partly allowed

ITA 1919/MUM/2021[2012-13]Status: DisposedITAT Mumbai23 Dec 2022AY 2012-13

Bench: Shri Kuldip Singh () & Shri Rifaur Rahman (

Section 143(3)Section 37(1)Section 40

interest payment was also made under section 194A of the Act and as such the same is allowable under section 36(1)(iii) of the Act. The Ld.CIT(A) decided the issue against the assessee by returning the following finding:- “It is a fact that the advance of Rs.2

M/S. Sahyog Homes Ltd, Mumbai vs. DCIT (A) -8(3), Mumbai

In the result, all the appeals are partly allowed

ITA 1918/MUM/2021[2011-12]Status: DisposedITAT Mumbai23 Dec 2022AY 2011-12

Bench: Shri Kuldip Singh () & Shri Rifaur Rahman (

Section 143(3)Section 37(1)Section 40

interest payment was also made under section 194A of the Act and as such the same is allowable under section 36(1)(iii) of the Act. The Ld.CIT(A) decided the issue against the assessee by returning the following finding:- “It is a fact that the advance of Rs.2

Saigal Seatrade, Mumbai vs. Asst CIT 21 (3), Mumbai

Appeal is partly allowed

ITA 7404/MUM/2019[2014-15]Status: DisposedITAT Mumbai22 Dec 2022AY 2014-15
For Appellant: Shri Jitendra JainFor Respondent: Ms. Samruddhi Hande
Section 143(3)Section 14ASection 36(1)(iii)Section 37Section 40

1,20,19,940/- under Section 14A of the Act, and (iii) disallowance of interest expenses of INR 37,80,959/- under Section 36(1)(iii) of the Act. Being aggrieved, the Appellant filed appeal before CIT(A) on the above additions/disallowances. Since the Appellant was not satisfied with ... allowable as deduction as per provisions of Section 40(b) of the Act and the same could not have been disallowed under Section 36(1)(iii) or Section 37 of the Act. It was further contended that interest on TDS and dishonoured cheque had already been disallowed and interest

M/S. Mercator Ltd, Mumbai vs. The Dy CIT 5(2), Mumbai

In the result, the appeal filed by the revenue and CO by the asssessee are dismissed and the asseessee appeal is allowed for statistical purposes

ITA 7278/MUM/2017[2010-11]Status: DisposedITAT Mumbai21 Dec 2022AY 2010-11

Bench: Shri Baskaran Br & Shri Pavan Kumar Gadaleita No. 7278/Mum/2017 (A.Y: 2010-11) & Co No. 21/Mum/2019 (2010-11) (Arising Out Of Ita No. 29/Mum/2018) Mercator Ltd Vs. Dcit 3Rd Floor, Mittal Tower- Range 5(2) B Wing, Nariman Point Aayakar Bhavan, Mk Mumbai- 400021. Road, Mumbai-400020. "थायी लेखा सं./जीआइआर सं./Pan/Gir No. : Aaacm5007A Appellant .. Respondent Dy. Cit Vs. Mercator Lines Ltd Range 5(2)(2), Rno.571 3Rd Floor, Mittal Tower- Aayakar Bhavan, Mk B Wing, Nariman Point Road, Mumbai – 400 021. Mumbai - 400020. "थायी लेखा सं./जीआइआर सं./Pan/Gir No. : Aaacm5007A Appellant .. Respondent Assessee By : Mr.Nikhil Tiwari.Ar Revenue By : Mr.Krishnakumarmishra.Dr Date Of Hearing 30.11.2022 Date Of Pronouncement 22.12.2022 आदेश / O R D E R Per Pavan Kumar Gadale Jm: 29/Mum/2018 & Co No. 21/Mum/2019 M/S. Mercator Ltd, Mumbai. The Cross Appeal Is Filed By The Assessee & The Revenue Against The Order Of The Commissioner Of Income Tax (Appeals) (Cit(A))-57, Mumbai Passed U/S 250 Of The Act & The Assessee Has Filed The Cross Objection(Co) In The Revenue Appeal.

For Appellant: Mr.Nikhil Tiwari.ARFor Respondent: Mr.KrishnaKumarMishra.DR
Section 143(3)Section 14ASection 250

High Court of Bombay in the case of CIT Vs. Reliance Utilities & Power Ltd, [2009] 178 taxman 135 Bombay has observed as under: Section 36(1)(iii) of the Income-tax Act, 1961 - Interest on borrowed capital - Assessee- company was engaged in business of generation of power - It had made ... concern out of interest-free funds Commissioner (Appeals) accepted assessee's contention and directed Assessing Officer to allow entire amount of interest under section 36(1)(iii) Tribunal upheld order of Commissioner (Appeals) - On instant appeal, it was seen that Commissioner (Appeals) as also Tribunal had recorded a clear finding