ITAT backs interest deduction where free funds covered investments
In short
The ITAT said a business can still claim interest deduction under section 36(1)(iii) if it had enough interest-free funds to cover the investment. The reported note says the tax department cannot tell a company how to use its money.
This matters for taxpayers claiming interest expense deductions. The case details, amount, and assessment year are not stated in the available reporting.
What the reporting says
The ITAT held that availability of interest-free funds sufficient to cover an investment can support a deduction of interest under section 36(1)(iii). The reported note says the Revenue cannot dictate how a business chooses to manage and use its funds. The available reporting does not state the taxpayer, year, amount, or the final outcome beyond that principle.
Why it matters
The ITAT is reported to have accepted that interest-free funds were enough to meet the investment, supporting a deduction claim under section 36(1)(iii). The Taxscan summary says the Revenue cannot direct how a business manages its funds. The available reporting does not identify the assessee, the tax year, the amount involved, or whether any further relief was granted.