Share application money is capital borrowed for the purpose of business until shares are allotted

Last updated: 03 January 2023
Quick Summary
The Income Tax Appellate Tribunal (ITAT) Delhi has ruled that money received as share application money is considered borrowed capital for business purposes until the shares are officially allotted. Consequently, any interest paid on this money is an allowable business expense under Section 36(1)(iii) of the Income Tax Act, 1961. The tribunal deleted the disallowance of interest paid on share application money, stating that the Act does not restrict such deductions.

Court :
ITAT Delhi

Brief :
It was held that Share application money is capital borrowed for purpose of business or profession until shares are allotted.

Citation :
ITO (2020) 77 ITR 50 (SMC) (SN) (Delhi) (Trib.)

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