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2015 (6) TMI 413 - AT - Income TaxDisallowance of Interest Expenses u/s. 36(1)(iii) - Held that:- As decided in assessee's own case for previous AY's [2012 (2) TMI 476 - ITAT MUMBAI] held unless there is a finding that assessee's investment is not business activity and the funds are not utilized for the purpose of business, disallowance under section 36(1)(iii) does not arise. There is no disallowance under section 14A in this year as the dividend income was taxable. Therefore, the interest disallowance has to be considered under section 36(1)(iii). If there is income or loss under the head "capital gains", the interest disallowance under section 36(1)(iii) pertaining to the investment activity is also to be considered as deduction, while working out the capital gain. Accordingly, the assessing Officer is directed to examine the nexus with borrowed funds on which interests was claimed to the utilization of funds either in investment activity or in business activity and disallow amount accordingly under section 36(1)(iii) and consider whether it is allowable while working our capital gain etc. Thus issue in this ground is restored to the file of the Assessing Officer for fresh consideration after examining the facts and to decide according to law. Assessee should be given an opportunity to make submissions and furnishing the necessary details in this regard. - Decided in favour of assessee for statistical purposes
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