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2019 (11) TMI 804 - AT - Income TaxDisallowance u/s 36(1)(iii) - deduction of the interest - HELD THAT:- Object of the assessee company for which it was established are, to carry on business in Hotels also. The assessee during the year under consideration has earned interest on loan only. The assessee claimed that in pursuance of the objects, the assessee made investment in M/s. Minor Hotels Pvt. Ltd. The assessee company is holding 32% of equity share capital and 100% of preference share capital issued by Minor hotels. The assessee was in the process of establishing hotel project, but, due to some litigation it was delayed. It is not always necessary that assessee should earn profit in assessment year under appeal in order to claim deduction of the expenditure. The assessee made investment in the group companies to take controlling interest in the group company. The assessee for that purpose has joined the JV and SVP also. It is not in dispute that assessee has borrowed money for business purpose and made investment in M/s. Minor Hotels Pvt. Ltd., and paid interest also. The genuineness of the payment of interest is not in dispute. Therefore, assessee is entitled for deduction of the interest in assessment year under appeal. The assessee made investment utilizing the borrowed funds for strategic business purposes and the amount borrowed have been utilised for business purpose only. Assessee has satisfied the conditions of Section 36(1) (iii) - Decided in favour of assessee.
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