#Interest Disallowance

ITAT Delhi ruled that taxpayers cannot claim interest deductions under Section 36(1)(iii) if they fail to prove borrowed funds were exclusively used for business purposes, especially when those funds were also deployed in exempt income-generating assets. The ruling reinforces that Section 14A disallowance cannot be assumed - it must be substantiated with clear allocation evidence, impacting all businesses with mixed-use borrowings and exempt income streams.

ITAT Bangalore rules that disallowance of interest under Section 36(1)(iii) of the Income Tax Act is unsustainable if the assessee's interest-free funds exceed advances to sister concerns. The ruling reinforces that balance sheet evidence alone can disprove tax avoidance presumptions, impacting corporate tax assessments.