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2019 (1) TMI 1393 - HC - Income TaxDisallowance u/s 36(1)(iii) - providing loan to its subsidiary and not reporting interest on it - commercial expediency - Held that:- As decided in Commissioner of Income Tax vs. Dalmia Cement (Bharat) Ltd [2001 (9) TMI 48 - DELHI HIGH COURT] once it is business, revenue cannot justifiable claim to put itself in the armchair of the businessman and assume the role to decide how much is reasonable expenditure having regarding to the circumstances of the case, No businessman can be compelled to maximize its profits. The authorities must put themselves in the shoes of the assessee and see how a prudent businessman would act. We have to see the transfer of the borrowed funds to the sister concern from the point of view of commercial expediency and not form the point of view whether the amount was advances for earning the profit The grounds of commercial expedience are now well established in tax jurisprudence. The position of the CIT(A) and its affirmation by the ITAT are essentially based upon a fact appreciation that the assessee forewent interest. As to whether there was an element of sacrifice and if so, for what purpose, is not for the Court to consider, given that the loans obtained by the assessee were for its business purposes. There is nothing on record to dispel/undermine the findings of the lower Appellate Authorities that commercial expedience dictated the nature of the transactions. - Decided against revenue
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