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2017 (3) TMI 1171 - AT - Income TaxPenalty u/s 271(1)(c) - disallowance of interest u/s 36(1)(iii) - Held that:- We notice that the disallowance of interest made u/s 36(1)(iii) on account of finance provided by way of share application/loan to its subsidiaries/sister concerns out of commercial expediency has been deleted stating the money was advanced by the assessee holding company to its subsidiaries for “business expediency”, which has to be judged by the business man itself. The facts brought before us are that the assessee has pleaded before the lower authorities that the amount invested has been used by the subsidiaries for the purpose of business. The assessee has significant interest in the business of subsidiaries, as these subsidiaries are in same business as that of assessee. It is further noted that major portion of the amounts were invested in the earlier years. No disallowance has been made in assessment year 2007-08 or earlier. Thus, keeping in view, the legal position as discussed above and facts of this case, it can be said that amount invested in the subsidiaries company was arising out of commercial expediency and was thus for the purpose of business of the assessee. Therefore, we reverse the decision of the ld. Commissioner of Income Tax (Appeals) and allow the appeal of the assessee Since, the addition on the basis of which the penalty was levied has been deleted by the co-ordinate Bench of the Tribunal, the impugned order confirming the penalty levied by the AO does not survive. - Decided in favour of assessee.
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