Interest on Money Borrowed

Court :
HC

Brief :
Held that in order to allow interest paid on borrowings in case of partnership firms, the assessee first to establish that it is allowable u/s 36(1)(iii) and then it does not exceed amount in excess of the limit laid down in sec. 40(b)(iv). Also held that opening balance of profits of the firm exceeds the loans given to sister concerns, presumed to be given out of its own funds.

Citation :
Munjal Sales Corporation Vs. CIT and Othrs 02/19/2008 [2008] 298 ITR 298

Interest on Money Borrowed Munjal Sales Corporation Vs. CIT and Othrs 02/19/2008 [2008] 298 ITR 298 Case Fact: Interest on money borrowed by the firm when allowable for partnership firm. Also interest free loans given to sister concern. Decision: Held that in order to allow interest paid on borrowings in case of partnership firms, the assessee first to establish that it is allowable u/s 36(1)(iii) and then it does not exceed amount in excess of the limit laid down in sec. 40(b)(iv). Also held that opening balance of profits of the firm exceeds the loans given to sister concerns, presumed to be given out of its own funds.

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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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