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2020 (8) TMI 74 - HC - Income TaxDeduction of interest paid for the borrowed amount used for business purpose - Loan taken from Bank given to Holding company as Interest free Advance - Addition u/s 36(1)(iii) - HELD THAT:- Assessee's case that this advance is paid to the holding Company for the investments made by them for securing land to be developed by the assessee.There is a Joint Development Agreement in which the assessee and the holding Company agreed to share profits at the rate of 50% each. Within about two months another Agreement dated 09.06.2009 is entered into by modifying certain clauses in the Joint Development Agreement, where under, the holding Company gets 75% of the Book profits. The Assessing Officer found that the holding Company had borrowed loans from Banks and there was no occasion rather need for the holding Company to take advances from the assessee for the purpose of purchase of the land. Apart from that the Assessing Officer found that the assessee was paying ₹ 42,85,869/- toward operational expenses and in the Ledger Account, this was shown as Joint Venture Share of the holding Company. This fact also led the Assessing Officer to conclude that there was no necessity for the assessee Company to give any advance to the holding Company. As held by the Hon'ble Supreme Court of India in M/s. S.A. Builders vs. CIT [2006 (12) TMI 82 - SUPREME COURT] the allowability or otherwise of interest payment under Section 36(1)(iii) depends on the facts and circumstances of the case. Currently, the Assessing Officer, the CIT (A) and the Tribunal, on facts held against the assessee.
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