Interest on borrowed capital ::

Court :
HC

Brief :
Held by the Hon`ble Court that as no nexus could be found between the borrowing and the interest free advance to sister concern and with clear finding that there was no element of commercial expediency, the interest paid on borrowed fund is not deductible.

Citation :
Elmer Havell Electrics and others Vs. C.I.T. and another

Interest on borrowed capital Elmer Havell Electrics and others Vs. C.I.T. and another 05/05/2005 (2005) 277 ITR 549 (Delhi) Case Fact: Whether interest paid on the funds borrowed and given as interest free loan to its sister concern is allowable as deduction? Decision: Held by the Hon`ble Court that as no nexus could be found between the borrowing and the interest free advance to sister concern and with clear finding that there was no element of commercial expediency, the interest paid on borrowed fund is not deductible.

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Judgement posted by

CA.Saibaburao Nanduri

Chartered Accountant

I am a commerce graduarte of Andhra University. Studied at HINDU COLLEGE, Guntur. Became FCA and started Practice under the name and style of M/s SAIBABU RAO CO I became Chairman of CA Institute, Guntur Branch, during the year 2008-09 My post qualifications are: Information Systems Audit DISA (ICAI) ... Read more

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