M/s Rajkumar Singh & Co. vs. Dy.C.I.T.
Parties Involved
Facts Summary
The case pertains to the disallowance of interest amounting to Rs.1,58,01,118/- by the Assessing Officer on the ground that the partners of the assessee firm had withdrawn heavy amounts and utilized them for their private purposes without paying any interest to the assessee firm. The assessee firm had claimed an expenditure of Rs.1,58,01,118/- on interest paid to various entities. The Tribunal examined the contentions of the assessee and found that the partners had withdrawn substantial amounts from the firm, which were not covered by non-interest-bearing funds. The Tribunal held that the interest paid on borrowed funds used by partners for non-business purposes was not allowable under Section 36(1)(iii) of the Income Tax Act.…
Decision in favour of
Assessee
Legal Issues
- 1. Disallowance of interest on borrowed funds used for non-business purposes.
Judgment Outcome
Decided in favour of Assessee.
Precedents Relied Upon
4 precedents cited in this judgement.
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