TMI Blog2017 (4) TMI 528X X X X Extracts X X X X X X X X Extracts X X X X ..... against assessee. Assessee appellant has taken loan for business purposes from various sources including U.P.F.C. and Bank of Baroda and had paid interest thereon amounting to ₹ 5,93,644/-. It claimed deduction of the said amount under Section 36(1)(iii) of the Act but the authorities denied the said deduction on the ground that the assessee has given interest free advances to its partners which means that it had surplus money which could have been utilised to clear off the loan so as to reduce the interest liability. In order to get the benefit under Section 36(1)(iii) of the Act it is settled in law that only three factors are relevant namely that the assessee had borrowed money for business purpose; it has utilised it for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 54 (Bom.). (ii) Whether the ITAT was right in confirming the dis-allowance of interest of ₹ 5,93,644/- when the loan was used for business purpose and all the conditions of Section 36(1)(iii) of the Act was fulfilled as held in case CIT Vs. Radico Khaitan Ltd. (2005) 274 ITR 354 (Alld.)? In respect of the first question aforesaid the submission is that the Income Tax Officer while directing for reassessment under Section 148 of the Income Tax Act, 1961 (hereinafter referred to as the Act) had only assigned two reasons for formulating the opinion for reassessment.The aforesaid reasons to believe does not include the claim in respect of purchase and sale of cotton and as such the assessing authority was not competent to make r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erial before the assessing authority to establish escapement of income chargeable to tax in addition of the reasons to believe recorded. Sri Suyash Agarwal, learned counsel in this connection has placed reliance upon the Division Bench decision of this court dated 18.02.2015 passed Income Tax Appeal No.270 of 2006. We have perused the aforesaid decision and find that it does not specifically deals with the issue in question regarding the reassessment on all counts including that which may be in addition to the reason to believe recorded and may have come to the notice of the Assessing Authority subsequently during the pendency of the reassessment proceedings. It does not even take into consideration the specific language as used in Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order to get the benefit under Section 36(1)(iii) of the Act it is settled in law that only three factors are relevant namely that the assessee had borrowed money for business purpose; it has utilised it for the business; and that it had paid interest on it. In the case at hand there is no dispute that the borrowing was for business purposes, it was utilised in the business and the assessee had paid interest on it therefore, the interest so paid was deductable under Section 36(1)(iii) of the Act. Accordingly, denial of deduction on any other ground is not tenable in law. Therefore, the sum of ₹ 5,93,664/- of the interest amount as paid by the assessee is liable to be deducted under Section 36(1)(iii) of the Act. In view of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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