Interest Deduction Denied: Unsecured Loans Lack Credible Evidence Under Section 36(1)(iii) Fail Substantive Test

ITAT held that interest on unsecured loans was correctly disallowed under section 36(1)(iii). The assessee failed to substantiate the genuineness and creditworthiness of loan transactions. Mere routing of interest through banking channels or TDS deduction does not prove loan legitimacy. The tribunal found no credible documentary evidence to establish the identity of lenders or loan authenticity. The assessee's inability to provide repayment details or demonstrate commercial substance of loans justified the disallowance of interest expenditure. The decision reinforces the principle that deduction of interest is contingent upon proving a genuine and subsisting business liability. Ultimately, the appeal was decided against the assessee, upholding the lower authorities' findings. .....

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