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2010 (10) TMI 604 - AT - Income TaxDisallowance - Interest fee advance lent to the sister concern - Since, the assessee made interest free advance to its subsidiary company which was incorporated for doing life insurance business - The assessee's group is carrying general insurance business and the main activity of the assessee is that of financing - The Hon'ble Supreme Court in the case of S.A.Builders Ltd. vs. CIT [2006 -TMI - 3364 - SUPREME COURT ] has held that wherein interest bearing funds are lent to the sister concern without interest, the A.O. needs to examine the purpose of loan - If the loan is advanced for commercial expediency and not utilized by the Directors of the sister concern for their personal benefit, then the deduction of interest has to be allowed - Hence, the learned CIT(A) has rightly relied on this judgement in deleting this addition - Decided in favour of assessee.
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