Interest on borrowed fund allowed only on the portion used in the business

Last updated: 15 September 2012

Court :
INCOME TAX APPELLATE TRIBUNAL

Brief :
The facts in brief. The assessee is a company engaged in the business of running of hospitals under the brand name “Metro” in various parts of the country. The company has high expertise in operating and managing Nursing Homes/Hospitals specially with respect to Cardio Vascular Care. It filed its return of income for the Assessment Year 2007-08 on 31.10.2007 declaring an income of Rs.7,13,10,790/-. The A.O. completed the assessment u/s 143(3) on 29.12.2009, assessing income at Rs.7,60,620/-, where interalia he has disallowed interest on borrowed capital as well as u/s 14A of the Income Tax Act, 1961. Aggrieved the assessee carried the matter in appeal before the CIT. The First Appellate Authority deleted the disallowance on proportionate interest made by the A.O. He also restricted the disallowance made u/s 14A. Aggrieved both the assessee and the Revenue are in appeal before us.

Citation :
Metro Institute of Medical Sciences P.Ltd. X-1, Sector 12, Noida, UP Pin 201 301 (Appellant) vs. ACIT, Range 6 New Delhi(Respondent)