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2020 (5) TMI 596 - AT - Income TaxDisallowance u/s 36(1)(iii) - interest expenses incurred on advancement of loans to the sister concerns on account of commercial expediency - appellant's arguments that the advances were made out of own funds and the same was out of commercial expediency - HELD THAT:- Though the assessee made an oral plea that the money had been advanced to the sister concerns on account of commercial expediency, the assessee failed to place any evidence to suggest whether funds advanced by the assessee to the sister concerns was in the nature of interest free own funds or the funds were advanced on account of commercial expediency. Interest paid by the assessee on such account cannot be allowed. The only plea of the assessee is that the assessee had mortgaged its property to avail bank loans for the sister concerns and if the sister concerns failed in their business, it will effect the profitability of the assessee - assessee has not produced an iota of evidence to prove that it has mortgaged its property, and on its classification of funds as NPA, it would affect the assessee's profitability. We are not in a position to uphold the argument of the Ld. AR on this issue. Judgment as relied on by the Ld. AR in the case of Munjal Sales Corporation v. CIT [2008 (2) TMI 19 - SUPREME COURT] cannot be applied to the facts of the assessee's case. In that case, the issue was with regard to allowability of interest u/s. 36(1)(iii) subject to provisions of section 40(b)(iv) - Decided against assessee.
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