INTEREST ON CAPITAL BORROWED - OTHERS |
Corporate taxation ID – 21 (JBC-025) |
East India Pharmasuiticle Work (SC) | Interest on the borrowal made for the payment of income tax is not allowable as deduction. |
Belapur Co. Ltd. (Bom) | Interest on money borrowed for the payment of divided is an allowable deduction |
Madhav Prasad Jatia (SC) | Interest on borrowed money for the payment of donation is not an allowable since it personal obligation to do so. |
Middle East Construction Equipment (Ori) | Money borrowed and invested in the government securities since it was required to do so as per government’s rules and regulations to obtain the work contract from state government. Interest on money so borrowed is allowable as deduction. |
Bombay Steam Navigation (SC) | Capital means money only. Thus if any compensation paid for the delayed payment of purchase consideration of amalgamation will not qualify as deduction u/s 36(1)(iii). However such compensation is revenue in nature and fully allowable as deduction. |
Veecumsees Ltd (SC)
| Interest on capital borrowed for the purpose of discontinued activity is an allowable deduction. |
Gopal Bansilal Inani (SC) (Important) | Interest paid by HUF to its co-parceners on the moneys lent by them is not an allowable deduction. |
V.P. Gopinathan (SC) (Important) | When interest is paid on the loan taken on the security of fixed deposits by itself do not qualify for the purpose of deduction. What in reality to be seen is the utilization of the borrowed money. If it was utilised for the purpose of business or profession than the interest on loan shall qualify for the purpose of deduction. |
Kirloskar Electric Co. Ltd. (Kar) (Important)
| Preference share capital is a contribution to capital of company by shareholders and not a borrowing by company subject to payment of interest. Dividend which is paid to such shareholders is to be paid only out of profits of company and dividend paid cannot be equated to interest paid on borrowed capital. Dividend on preference shares not deductible as interest. |