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2013 (11) TMI 579 - ALLAHABAD HIGH COURTAllowability of deduction u/s 36 (1) (iii) of the Income Tax Act - Interest liability on loans received from the State Government - Assessee - opposite party is a company of the State Government. The State Government has advanced interest bearing loan to the assessee company. But the assessee has not paid any interest to the Government but claimed the deduction pertaining to the interest under section 36(1)(iii) of the Act. The A.O. has disallowed the same by observing that the interest has not been actually paid – Held that:- After discussing number of case laws observed that the assessee is entitled for the deduction under section 36 (1)(iii) of the Act, as the assessee is maintaining the books of accounts on mercantile system of accounting – Decided against the Revenue.
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