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2015 (7) TMI 1102 - AT - Income TaxAddition on account of finance charges/interest on borrowed funds - whether assessee could not prove with evidence at the time of assessment that the borrowed funds are wholly exclusively used for business purpose or diverted to give interest free advance to sister concern - Held that:- The assessee purchased non-convertible debentures of ETHL Communications Series-A on 11/02/2010 being 171 number of units of face value of ₹ 10,00,000/- and deal value of ₹ 15,09,93,000/-. Thus, it is seen that the Commissioner of Income Tax (Appeals) after verifying this letter has arrived at a conclusion that the amount borrowed was for purchase of debentures and not for any other purpose by the assessee. Further no evidence was brought on record by the Revenue to show that the assessee has advanced interest bearing funds to its subsidiaries as interest free advance - Decided in favour of assessee Addition made on account of interest free loans advanced to the sister concerns - Held that:- We find that the Commissioner of Income Tax (Appeals) has observed that the assessee had given interest free advances to its subsidiaries in its business requirements. He placed reliance on the decision of the Hon’ble Bombay High Court in the case of CIT-7 Vs. Reliance Communications [2012 (5) TMI 160 - BOMBAY HIGH COURT ] and has held that where interest free borrowed funds are advanced as interest free loans to its subsidiaries for business expediency, the interest cannot be disallowed. Commissioner of Income Tax (Appeals) held that in the case of the assessee, business expediency exists and interest free own funds have been advanced. No interest expenses have been claimed by the assessee on this account. Therefore, he correctly deleted the notional interest - Decided in favour of assessee
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