NEW DELHI: Investors who buy shares with borrowed money from institutions cannot claim tax deduction on interest paid on such borrowings, a tax tribunal has ruled. Giving its ruling in a case where two companies had claimed tax deduction on interest paid over the sum borrowed from Reliance Capital, the Mumbai bench of the Income-Tax Appellate Tribunal had held that "no deduction is allowable to the assessee in respect of interest paid on borrowed funds". Nikhil Investments and Kankhal Investments and Trading borrowed funds from Reliance Capital and subsequently bought shares of construction major Larsen & Toubro. While Nikhil Investments borrowed about Rs 25 crore, Kankhal had borrowed about Rs 5.08 crore and later they claimed tax deduction under section 36(1)(iii) of the Income- Tax Act.
4 May, 2008, 1138 hrs IST, PTI
THE ECONOMIC TIMES
About Me
- Kamal Kumar Pandey (Adv. Supreme Court of India)
- Lawyer Practising at Supreme Court of India. Court Experience: Criminal, Civil & PIL (related to Property, Tax, Custom & Duties, MVAC, insurance, I.P.R., Copyrights & Trademarks, Partnerships, Labour Disputes, etc.) Socio-Legal: Child Rights, Mid Day Meal Programme, Sarva Shiksha Abhiyaan, Women Rights, Against Female Foeticide, P.R.Is, Bonded Labour, Child labour, Child marriage, Domestic violence, Legal Literacy, HIV/AIDS, etc. Worked for Legal Aid/Advise/Awareness/Training/Empowerment/Interventions/Training & Sensitisation.
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