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2016 (7) TMI 824 - AT - Income TaxDisallowance of interest under Section 36(1)(iii) - AR challenging the impugned order contended that the assessee company has transferred certain funds to its subsidiary company without any interest out of the loan taken at interest for business expediency - Held that:- The assessee has advanced loan of ₹ 1,23,48,111/- to Shri Manoj Kumar Jain without charging any interest and lent loan of ₹ 3,28,30,957/- to M/s. R.J. Fabrics by charging interest @ 6% out of the funds borrowed by the assessee at the interest of 18%. Had the loan been advance to Shri Manoj Kumar Jain and M/s. R.J. Fabrics for commercial expediency, the assessee would not have charged interest even @ 6% per annum. The assessee has failed to prove any business nexus between the assessee company and Shri Manoj Kumar Jain except the fact that Shri Manoj Kumar Jain is son of the assessee So, when the assessee has failed to prove commercial expediency for advancing the interest free loan/loan at the nominal rate of interest to its subsidiary and relative, the judgments cited as S.A. Builders vs. CIT (A) [2006 (12) TMI 82 - SUPREME COURT ] , Chandigarh, CIT vs. Reliance Utilities & Power Ltd. [2009 (1) TMI 4 - BOMBAY HIGH COURT] and CIT vs. Jugal Kishore Dangayach (2013 (11) TMI 1661 - RAJASTHAN HIGH COURT) relied upon by the assessee are not applicable to the facts and circumstances of the case. We are of the considered view that the AO has rightly disallowed the claim of the assessee u/s 36(1)(iii) of the Act, affirmed by the CIT (A). - Decided against assessee.
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