“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)

Tata Realty and Infrastructure Ltd, Mumbai vs. Ast CIT 2(3)(1), Mumbai

ITA 763/MUM/2020[2015-16]Status: DisposedITAT Mumbai28 Jan 2022AY 2015-16

For Appellant: Aarti VissanjiFor Respondent: Sanjeev Kashyap

Section 115JSection 143(2)Section 143(3)

been given out of interest free own funds should apply and the learned CIT(A) ought to not have disallowed interest expense under section 36(1)(iii) of the Act.” 7. During the course of the assessment from the balance sheet the A.O noticed that assessee has extended short term

Jt CIT(OSD) 2(3)(1), Mumbai vs. M/S Tata Realty and Infrastructure Ltd., Mumbai

ITA 730/MUM/2020[2015-16]Status: DisposedITAT Mumbai28 Jan 2022AY 2015-16

For Appellant: Aarti VissanjiFor Respondent: Sanjeev Kashyap

Section 115JSection 143(2)Section 143(3)

Addl.CIT, Special Range-4, New Delhi vs. G.S. Pharmbutor Pvt. Ltd., New Delhi

In the result, the appeal of the Revenue is dismissed

ITA 4136/DEL/2018[2014-15]Status: DisposedITAT Delhi28 Jan 2022AY 2014-15

Bench: Sh. A. D. Jain, Vice-Dr. B. R. R. Kumarita No. 4136/Del/2018 : Asstt. Year : 2014-15 Addl. Cit, Vs M/S G.S. Pharmabutor Pvt. Ltd., Special Range-4, 415, Modi Tower, 98, Nehru Place, New Delhi New Delhi-110019 (Appellant) (Respondent) Pan No. Assessee By : Sh. P. S. Kasyap, Ca Revenue By : Sh. Umesh Takyar, Sr. Dr Date Of Hearing: 28.10.2021 Date Of Pronouncement: 28.01.2022

For Appellant: Sh. P. S. Kasyap, CAFor Respondent: Sh. Umesh Takyar, Sr. DR

Section 36(1)(iii)

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘C’, NEW DELHI Before Sh. A. D. Jain, Vice-President Dr. B

M/S Majestic Infracon P.Ltd, Mumbai vs. ACIT 12(3)(2), Mumbai

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

ITA 3711/MUM/2019[2014-15]Status: DisposedITAT Mumbai25 Jan 2022AY 2014-15

Bench: Shri Rajesh Kumar & Shri Ravish Sood

For Appellant: Ms. Ritu Kamal Kishore, A.RFor Respondent: Shri Ajaykumar Sharma, D.R

Section 37

Rs.53,20,51,342/- was paid and out of which Rs.53,20,79,833/- was offered for disallowance and add back under section 36(1)(iii) of the IT Act 1961 by the assesses in the computation of total Income filed with the return of income with the remarks ‘interest

M/S Majestic Infracon Private Limited, Mumbai vs. ACIT - 12(3)(2), Mumbai

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

ITA 3710/MUM/2019[2013-14]Status: DisposedITAT Mumbai25 Jan 2022AY 2013-14

Bench: Shri Rajesh Kumar & Shri Ravish Sood

For Appellant: Ms. Ritu Kamal Kishore, A.RFor Respondent: Shri Ajaykumar Sharma, D.R

Section 37

Tata Sons Ltd., Mumbai vs. DCIT Cir. - 2(3)(1), Mumbai

In the result, assessee’s appeal is partly allowed and revenue’s appeal is dismissed

ITA 6418/MUM/2016[2010-11]Status: DisposedITAT Mumbai21 Jan 2022AY 2010-11

Bench: Shri S.Rifaur Rahman ( & Shri Pavan Kumar Gadale ()

For Appellant: 1) Transfer Pricing Adjustment - Guarantee Fees

Section 115JSection 143(1)Section 143(3)Section 14ASection 37Section 92C

case and in law, the Ld.CIT(A) has erred in holding that interest on investments is allowable to the assessee under section 36(1)(iii), subject to the provisions of Section 14A without appreciating that loans have been taken for the purpose of earning income under the head ‘Capital Gains

ACIT, Cir.-2(3)(1), Mumbai vs. Tata Sons Ltd., Mumbai

In the result, assessee’s appeal is partly allowed and revenue’s appeal is dismissed

ITA 6402/MUM/2016[2010-11]Status: DisposedITAT Mumbai21 Jan 2022AY 2010-11

Bench: Shri S.Rifaur Rahman ( & Shri Pavan Kumar Gadale ()

For Appellant: 1) Transfer Pricing Adjustment - Guarantee Fees

Section 115JSection 143(1)Section 143(3)Section 14ASection 37Section 92C

M/S I G Petrochemical Limited, Bangalore vs. Deputy Commissioner of Income Tax Circle-3(1)(1), Bangalore

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

ITA 1317/BANG/2018[2006-07]Status: DisposedITAT Bangalore21 Jan 2022AY 2006-07

Bench: Shri N.V. Vasudevan & Shri Chandra Poojariassessment Year: 2006-07

For Appellant: Shri S. Parthasarathi, A.RFor Respondent: Shri Pradeep Kumar, D.R

Section 143(3)Section 2Section 2(24)(vd)Section 263Section 28Section 41(1)

cent per annum to the K in terms of the contract but never claimed deduction for payment of interest under section 36(1)(iii) of the Act. The deduction claimed by the assessee in previous assessment years was due to the deprecation of the machine and not on the interest

M/S. Rameshwar Enterprises, Mumbai vs. Pr CIT-20, Mumbai

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

ITA 522/MUM/2021[2015-16]Status: DisposedITAT Mumbai20 Jan 2022AY 2015-16

Bench: Shri Promod Kumar () & Ms. Suchitra Kamble () Assessment Year: 2015-16 M/S Rameshwar Enterprises, Pr. Cit-20, Room No. 418, 4Th Floor, Piramal 401, Rangoli Time Complex, Dr.Ambedkar Road, Parel (E), Vs. Chamber, Lal Baug, Parel, Mumbai-400012. Mumbai-400012. Pan No. Aahfr 2612 A Appellant Respondent Assessee By : Mr. Piushchhajed, Ar Revenue By : Mr. Sunil Kumar Jha, Dr Date Of Hearing : 13/01/2022 Date Of Pronouncement : 20/01/2022

For Appellant: Mr. PiushChhajed, ARFor Respondent: Mr. Sunil Kumar Jha, DR

Section 143(3)Section 263Section 36(1)(iii)Section 40A(2)(b)

fresh assessment after verifying the deployment of interest bearing funds for non-business purposes and allowability of interest expenses as per provisions of section 36(1)(iii) of the Act. 4. Being aggrieved by the order u/s 263 of the Act passed by the Pr. CIT, the assessee is before

Excel Industries Ltd., Mumbai vs. The CIT -CC-6(3), Mumbai

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

ITA 238/MUM/2021[2016-17]Status: DisposedITAT Mumbai13 Jan 2022AY 2016-17

Bench: Shri Prashant Maharishi & Shri Pavan Kumar Gadaleexcel Industries Ltd Vs. The Cit-Cc 6(3) 184-87, Excel Estate, 19Th Floor, Air India Sv Road, Jogeshwari Bldg, Nariman Point, (West)Mumbai – 400102 Mumbai – 400 021. "थायी लेखा सं./जीआइआर सं./Pan/Gir No. : Aaace2488F Appellant .. Respondent Appellant By : Mr.Kirit Kamdar. Ar Respondent By : Mr.Ajay Kumar. Dr Date Of Hearing 13.01.2022 Date Of Pronouncement 19.01.2022 आदेश / O R D E R Per Pavan Kumar Gadale Jm: The Assessee Has Filed The Appeal Against The Order Of The Cit(A)-54, Mumbai Passed U/S 143(3) & 250 Of The Act. The Assessee Has Raised The Following Grounds Of Appeal. 1. On The Facts & In The Circumstances Of The Case & In Law, The Cit(A) Erred In Confirming The Action Of The Ao In Disallowing A Sum Of Rs. 1,00,50,000/- Out Of Interest Paid Attributable To Loan To A Subsidiary. 2. On The Facts & In The Circumstances Of The Case & In Law, The Cit(A) Erred In Confirming The Action Of The Ao In Levying An Amount Of Rs. 5,42,910/- On Account Excel Industries Ltd, Mumbai. Of Interest U/S 115P For Dividend Distributed Under Section 115-O, For Which Dividend Distribution Tax Had Already Been Paid. 3. On The Facts & In The Circumstances Of The Case & In Law, The Cit(A) Erred In Not Adjudicating The Ground On Additions Made To Book Profits U/S 115Jb.

For Appellant: Mr.Kirit Kamdar. ARFor Respondent: Mr.Ajay Kumar. DR

Section 115Section 115JSection 115PSection 143(2)Section 143(3)Section 14ASection 36(1)(iii)

IN THE INCOME TAX APPELLATE TRIBUNAL “E” BENCH, MUMBAI BEFORE SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER & SHRI PAVAN KUMAR GADALE, JUDICIAL

Hdfc Bank Ltd (Successor to Businss of Centurion Bank of Punjab Ltd), Mumbai vs. DCIT 2(3), Mumbai

In the result, appeal is partly allowed

ITA 374/MUM/2012[2008-09]Status: DisposedITAT Mumbai13 Jan 2022AY 2008-09

Bench: Shri G.S.Pannu (Hon’Ble) & Shri Saktijit Dey (Hon’Ble)

Section 14A

Reliance Utilities and Power Ltd (supra), the jurisdictional High Court, while considering the issue of disallowance of interest expenditure made under section 36(1)(iii), has observed that if the assessee has a common pool of interest free and interest bearing funds and if the interest free funds are sufficient ... free funds. Though, this legal proposition was laid down by the Hon’ble jurisdictional High Court in the context of disallowance made under section 36(1)(iii); however, the same principle was reiterated by the Hon’ble jurisdictional High Court in respect of disallowance made under section 14A in case

Dharam Bhushan Jain, New Delhi vs. ACIT, Circle- 61(1), New Delhi

In the result, appeal of the Assessee is allowed

ITA 4578/DEL/2018[2014-15]Status: DisposedITAT Delhi10 Jan 2022AY 2014-15

Bench: Shri R.K. Panda & Shri N.K. Choudhary

For Appellant: Shri Ravi Pratap MallFor Respondent: Ms. Sangeeta Yadav, Sr.DR

Section 143(2)Section 234ASection 234BSection 234CSection 57Section 57o

personal expenses or making such investment on which no tax is payable, the disallowance could be made, otherwise, deduction is admissible either under section 36(1)(iii) or Section 57(iii) of the I.T. Act, 1961. He submitted that it is not the case where the assessee had no income

M/S. Foot Prints Collateral Services Pvt Ltd, Bangalore vs. Assistant Commissioner of Income Tax, Circle-3(1)(1), Bangalore

In the result, ground 6 and 7 are allowed

ITA 1872/BANG/2018[2014-15]Status: DisposedITAT Bangalore07 Jan 2022AY 2014-15

Bench: Shri George George K, Jm & Shri B.R.Baskaran, Am

For Appellant: --- None ---For Respondent: Sri.Nischal B, Addl.CIT-DR

Section 14ASection 36Section 36(1)(iii)Section 37

held that if the disallowance is not sustainable u/s 14A of the I.T.Act, the same is liable for disallowance as per section 36(1)(iii) of the I.T.Act. According to the A.O., the assessee had borrowed funds and not utilized for the business of the assessee but invested in shares ... Therefore, proportionate interest is to be disallowed as per section 36(1)(iii) of the I.T.Act. 4.1 Aggrieved, the assessee filed an appeal before the first appellate authority. The CIT(A) by relying on the judgment of the Hon’ble Delhi High Court in the case of Pr.CIT

DCIT, New Delhi vs. M/S Futurz Next Services Ltd., New Delhi

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

ITA 3556/DEL/2016[2011-12]Status: DisposedITAT Delhi04 Jan 2022AY 2011-12

For Appellant: Shri Ved Jain, Advocate &For Respondent: Shri Satpal Gulati, CIT, DR

Section 132Section 142Section 153A

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : A : NEW DELHI (Through Virtual Hearing) BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER

Giovani Fashion Limited, New Delhi vs. DCIT Circle-10(1), New Delhi

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

ITA 198/DEL/2021[2015-16]Status: DisposedITAT Delhi03 Jan 2022AY 2015-16

Bench: Shri Kul Bharat[Assessment Year : 2015-16] Giovani Fashion Ltd., Vs Dcit, C/O-Advocate Kanika Jain, Circle-10(1), D-80, Panchsheel Enclave, New Delhi. New Delhi-110017. Pan-Aaccg6540N Appellant Respondent Appellant By Ms. Kanika Jain, Adv. Respondent By Sh. Om Prakash, Sr.Dr Date Of Hearing 03.01.2022 Date Of Pronouncement 03.01.2022

Section 271(1)(c)Section 36(1)(iii)Section 37(1)

erred in facts and in circumstances of the case in making a disallowance of Rs.1,93,000/- under Section 36(1)(iii) of the Act. 4. The Ld. AO has erred in facts and in circumstances of the case in making a notional and estimated disallowance of Rs.17

Dcm Ltd., New Delhi vs. Addl.CIT, Special Range-3, New Delhi

ITA 603/DEL/2019[2013-14]Status: DisposedITAT Delhi31 Dec 2021AY 2013-14

Bench: Shri G.S. Pannu & Shri Ravish Sood

For Appellant: Shri V.P. Gupta, Advocate a/wFor Respondent: Ms. Yagyasaini Kakkar, CIT-DR

Section 115JSection 143(3)Section 14ASection 271(1)(c)Section 36(1)(iii)

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “B” NEW DELHI BEFORE SHRI G.S. PANNU, PRESIDENT AND SHRI RAVISH SOOD

Addl.CIT, Special Range-3, New Delhi vs. Dcm Ltd., New Delhi

ITA 183/DEL/2019[2013-14]Status: DisposedITAT Delhi31 Dec 2021AY 2013-14

Bench: Shri G.S. Pannu & Shri Ravish Sood

For Appellant: Shri V.P. Gupta, Advocate a/wFor Respondent: Ms. Yagyasaini Kakkar, CIT-DR

Section 115JSection 143(3)Section 14ASection 271(1)(c)Section 36(1)(iii)

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “B” NEW DELHI BEFORE SHRI G.S. PANNU, PRESIDENT AND SHRI RAVISH SOOD

Sri. Narayanaswamy Krishna, Bangalore vs. Assistant Commissioner of Income Tax, Circle- 3(2)(1), Bangalore

In the result, the assessee’s appeal is partly allowed

ITA 17/BANG/2020[2014-15]Status: DisposedITAT Bangalore27 Dec 2021AY 2014-15

Bench: Shri Chandra Poojari & Smt. Beena Pillaiassessment Year: 2014-15

For Appellant: Shri Koushik M., AdvocateFor Respondent: Smt. Priyadarshini Besaganni, Jt.CIT(DR)(ITAT), Bengaluru

Section 24Section 24n

IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH : BANGALORE BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI, JUDICIAL

DCIT, Circle-19(2), New Delhi vs. Pci Ltd., New Delhi

The Appeal of the Assessee is dismissed

ITA 7959/DEL/2019[2015-16]Status: DisposedITAT Delhi22 Dec 2021AY 2015-16

Bench: Shri R. K. Pandaa N D Shri N. K. Choudhry(Through Video Conferencing)

For Appellant: Shri SatishAggarwal, C. AFor Respondent: Shri M. Barnwal, Sr. D. R

Section 250Section 36(1)(iii)

Facts relevant to the adjudication of this appeal are that the Assessing Officer has made an addition of Rs.2,18,26,743/- under Section 36(1)(iii) of the Act on account of disallowance of interest expenses mainly on the basis that total available interest free funds in the hands ... Assessee do not have available interest-free funds and/or not to the extent of investment then the addition can be made under Section 36(1)(iii) of the Act on account of disallowance of interest expenses as made by the AO in this case. 5. On the other hand

Pci Ltd., New Delhi vs. ACIT, Circle-19(2), New Delhi

The Appeal of the Assessee is dismissed

ITA 7302/DEL/2019[2015-16]Status: DisposedITAT Delhi22 Dec 2021AY 2015-16

Bench: Shri R. K. Pandaa N D Shri N. K. Choudhry(Through Video Conferencing)

For Appellant: Shri SatishAggarwal, C. AFor Respondent: Shri M. Barnwal, Sr. D. R

Section 250Section 36(1)(iii)