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2017 (12) TMI 861 - AT - Income TaxDisallowance on interest payment - addition u/s.40A(2)(a) - related parties - investment in the joint venture, under J.V Agreement - Held that:- The expression "commercial expediency" is an expression of wide import and includes such expenditure as a prudent businessman incurs for the purpose of business. The expenditure may not have been incurred under any legal obligation, but yet it is allowable as a business expenditure if it was incurred on grounds of commercial expediency. We note that loans and advances were given by the assessee to its joint venture on the grounds of commercial expediency therefore the assessee's issue under consideration is not covered by the provisions of section 40A (2) (a) of the Act. Therefore, based on the above discussions, we are of the view that assessee has a interest in its joint venture, and hence if the assessee advances money to a joint venture and the same is used by the joint venture for some business purposes, the assessee would, in our opinion, ordinarily be entitled to deduction of interest on its loans and advances under section 37 (1)/36(1) (iii). -Decided in favour of assessee.
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