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2020 (7) TMI 303 - AT - Income TaxDisallowance of interest u/s 36(1)(iii) - Investment in the share capital of subsidiary company - HELD THAT:- The undisputed fact is that this is not the first year of business of the assessee. It is also not in dispute that the subsidiary companies of the assessee are also engaged in the same business of production, generation, transmission and distribution and supply of electricity. The facts of the case in hand are on stronger footing in as much as in the case in hand, the appellant did not advance any loan to its subsidiaries but has invested in the shares of subsidiary companies. As mentioned elsewhere, subsidiary companies of the appellant are engaged in the same business as that of the assessee which is also evident from the main object clause in the Memorandum of Association. See SA BUILDERS LTD.[2006 (12) TMI 82 - SUPREME COURT] Adverting to the facts of the case in hand, the assessee has successfully demonstrated that the investment in shares to subsidiary company was in furtherance of main objects of its business and, therefore, in our considered view, the assessee is very much entitled for claim of interest paid on borrowed capital. We, accordingly, set aside the findings of the CIT(A) and direct the Assessing Officer to delete the addition. - Decided in favour of assessee.
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