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2022 (1) TMI 1036 - AT - Income TaxDisallowance of deduction u/s. 36(1)(iii) - HELD THAT:- The investment in this entity was for business purposes only. The other entity was also engaged in similar line of business i.e. civil construction and sale of flats. Therefore, in our considered opinion, these investments were out of commercial expediency and the ratio of decision in the case of S.A. Builders Ltd. [2006 (12) TMI 82 - SUPREME COURT] was applicable wherein it was held that once it was established that there was nexus between the expenditure and purposes of business, which need not be the business of the assessee, deduction u/s. 36(1)(iii) was to be allowed. The ratio of decision in CIT Vs. Hotel Savera [1997 (11) TMI 37 - MADRAS HIGH COURT] is applicable to the facts of the case wherein it was held that in case own funds and borrowed funds were inextricably mixed up in such a way that it was impossible to delineate which funds were advanced to group concern, no interference could be made in the Tribunal's finding that no disallowance u/s. 36(1)(iii) would be called for. Deriving strength from these decisions, we delete the impugned disallowance as sustained by learned first appellate authority. - Decided in favour of assessee.
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