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The Tax Publishers Lalbhai Realty Finance Pvt. Ltd. v. ACIT [ITA Nos. 2415 & 2416/AHD/2012, dt. 28-4-2016] : 2016 TaxPub(DT) 2300 (Ahd-Trib) Allowability of interest to sister concerns Facts: Assessee investment company was found to have received a loan from HDFC bank for 46 crores which was disbursed to Arvind mills for 31 crores on two dates and 15 crores to one SSKI. Officer disallowed the interest paid to HDFC bank proportionately for the loan given to SSKI. This was upheld by the Commissioner (Appeals). On further appeal: Held in favour of the assessee that the loan to SSKI was for developing a property jointly arising out of a MOU. This was found to be correct on facts and the MoA of the company also had objects clause as real estate investment etc. thus there was no reason warranted to disallow the said interest. The issue whether the loan came out of the accumulated reserves etc. did not arise because of exact back to back lending of the borrowed money from HDFC.
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