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2017 (2) TMI 221 - HC - Income TaxDisallowance of the interest paid on its borrowed funds in excess of 12 per cent. u/s 36(1) - assessee company had utilised its own funds to advance loans at a lower rate of interest to sister concern - Held that:- In the present case, financial condition of the sister concern was not good and to help those, for their smooth running, loan was advanced and a lesser rate of interest was charged. Both the sister companies are subsidiary of the assessee and there is nothing per se adverse. For the welfare and proper functioning of the sister companies, the assessee in its wisdom, if decided to advance loan so that ultimately the sister company may function properly, the assessee being holding company would also be benefitted. Thus, the loan advanced to sister companies was for commercial expediency and not for any charity, sentimental or personal reasons. We therefore, answer the question in favour of assessee and hold that assessee was entitled for deduction of interest under section 36(1)(iii) and the view taken by the Tribunal otherwise is not correct. - Decided in favour of assessee
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