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

Last updated: 03 January 2023

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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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1 Year PLAN

1999

(Excl. of GST ₹359)

2 Years PLAN

3499

(Excl. of GST ₹629)

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4999

(Excl. of GST ₹899)

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FCS Deepak Pratap Singh

Associate Vice President - Secretarial & Compliance (SBI General Insurance Co. Ltd.)

Dear Friends, MyselfFCSDeepak P. Singh ( B.Sc.. LLB, FCS. FIII, CIAFP, CRMP, ID) , A Fellow Member of ICSI, Law Graduate ,Fellow Member of Insurance Institute of India, Certified Independent Director ,Certified Insurance Anti Fraud Professional , Certified Risk Governance Professional ( ICSI-III) and cleared Limited I ... Read more

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