[aaykarbhavan] SA builders inapplicable- Disallows interest as funds diverted for advancing interest-free loan - Karnataka HC

HC : Disallows interest as funds diverted for advancing interest-free loan; SA builders inapplicable

HC reverses ITAT order, denies interest deduction as assessee diverted borrowed funds for making interest-free advance to sister concern; Holds ITAT misinterpreted SC ruling in S.A. Builders by allowing deduction to assessee on ground that sister concern suffered arbitration award; Observes SC, in S.A. Builders, merely held that deduction may be justified when interest-free advance to sister concern was guided by commercial expediency, not for every interest free loan advanced to sister concern; Merely because sister concern got into litigation and involved itself into arbitration proceedings, wherein assessee was not a party, no ground for allowing deduction : Karnataka HC

[TS-544-HC-2014(KAR)

 

Courtesy: tax sutra

Regards

Prarthana Jalan

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Posted by: Prarthana Jalan <prarthanajalan@ymail.com>

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