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2017 (4) TMI 56 - AT - Income TaxDisallowance under the head advance and loans given by the assessee to its 100% subsidiary - CIT-A allowed claim - Held that:- We find that two amounts were advanced to the WOS under the head loan and advances, that the MOA in Clause 10B clearly stipulated that assessee could run a subsidiary outside India, that the subsidiary was purchasing goods from the assessee only, that it suffered losses and finally the European business had to be discontinued, that the loan/advances made to the WOS were for running the business of the assessee in Germany. In our opinion, the nature of the transaction in the hand of the recipient cannot decide the allowability of expenditure in the hands of the lender. We are deciding the case of an entity which had advanced certain amount to its subsidiary for running its business. In such a case expenditure incurred by it has to be allowed as business loss or an expenditure incurred for running the business i.e. u/s. 28/37 of the Act. - Decided against the AO.
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