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2017 (3) TMI 666 - AT - Income TaxInterest expenditure on borrowed fund advanced to its sister concern u/s 36(1)(iii) - whether borrowed fund has been advanced in the form of share application money but not as a loan - CIT (Appeals) placing reliance on the decision of the Hon’ble Supreme Court in the case of SA Builders Ltd. Vs. CIT [2006 (12) TMI 82 - SUPREME COURT] deleted the disallowance - Held that:- On perusal of the findings of the Ld. CIT (Appeals), we are of the view that the Ld. CIT (Appeals) has not gone into the aspect of commercial expediency in advancing the money by the Assessee to its sister concerns. As could be seen from the above, it was made very clear by the Hon’ble Supreme Court that to consider whether deduction u/s 36(1)(iii) should be allowed on the amount borrowed by Assessee for advancing to sister concern, the authorities and courts should examine the purpose for which the Assessee advanced the money and what the sister concern did with the money. It was also further held that what is relevant is to see whether the amount was advanced as a measure of commercial expediency but not whether the Assessee advanced those for earning profits. The lower authorities have not examined the facts and the above aspect of the matter in this case so as to arrive at a conclusion that there is commercial expediency. The Assessee also did not give any explanation as to how there is a commercial expediency in advancing the money to sister concerns. Therefore, we are of the view that this aspect of the matter has to be re-examined by the Assessing Officer and the Assessee shall furnish all necessary details in this regard. Thus, we restore the matter to the file of the Assessing Officer who shall decide the issue afresh . Appeal of the Revenue allowed for statistical purpose.
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