2006 (4) TMI 516

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..... ction that was disallowed on the ground that the assessee had not recovered interest from its debtors one of whom happened to be its own sister concern. The Tribunal has by the impugned order reversed that view. It has in our opinion, correctly held that there was no direct linkage between interest which the assessee was paying to its creditors and the debts which it had to recover from other part .....

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..... the interest is allowable as a deduction, as expenditure wholly and exclusively incurred for the purpose of business under section 37(1). We are not concerned with the question as to whether the assessee ought to have charged interest from its trade debtors. In our opinion, even this question should be answered in favour of the assessee, since it is a well-settled principle of income-tax law that .....

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..... ust because the respondent/assessee had not charged interest from its trade debtors did not mean that interest paid by it to its trade creditors should not be allowed as a deduction especially when there is no dispute about the genuineness of the payment made by the assessee. 3. No substantial question of law arises for our consideration in this appeal which fails and is hereby dismissed. - .....

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