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| The Tax Publishers2020 TaxPub(DT) 4938 (Mum-Trib) INCOME TAX ACT, 1961
Section 36(1)(iii)
Since investment made by the assessee in group companies were meant for commercial expediency because it was a composite investment decision for benefit of overall group concerns. Therefore, no disallowance of deduction under section 36(1)(iii) was called for on account of assessee having advanced interest-free loans to its group companies.
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Business deduction under section 36(1)(iii) - Interest on borrowed capital - Advancement of interest-free loan to group companies - Commercial expediency
Assessee claimed deduction under section 36(1)(iii). AO disallowed assessee's claim proportionately on the ground of assessee having advanced interest-free loans to its group companies.Held: Assessee company was holding substantial shares and was also considering set up of group companies, Global Holding company controlled the whole group concerns which included assessee company also. Assessee company invest other group companies in which holding company controls the majors shares as well as controlled composition of directors. Therefore, investment made by the assessee in group companies were meant for commercial expediency because it was a composite investment decision for benefit of overall group concerns. Accordingly, no disallowance of deduction under section 36(1)(iii) was called for.
Followed:S. A. Builders v. CIT (2007) 288 ITR 1 (SC) : 2007 TaxPub(DT) 833 (SC).
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2013-14
INCOME TAX ACT, 1961
Section 268A
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