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2004 (5) TMI 50 - HC - Income TaxAO held that since the assessee had diverted its borrowed funds to a sister concern without charging any interest, proportionate interest relating to the said amount out of the total interest paid to the bank deserved to be disallowed - Tribunal has recorded categorical findings of fact that the amounts advanced by the assessee to its sister concern, had been advanced by utilising the overdrafts account and that on the dates on which the amounts were so advanced, there was no credit balance in the bank account of the assessee. - Assessee has not been able to explain the purpose for which the amount had been advanced - no material on record to show that the assessee had derived any business benefit by advancing the interest-free amounts to its sister concern. - Disallowance made by the Assessing Officer was justified.
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