Description:
S.36 (1) (iii): Business expenditure – Interest on borrowed capital – Advance to sister concern – Mutual accommodations – Commercial expediency.
When there is mutual accommodation by both parties in terms and lending and borrowing from each other, the assessees claim of commercial expedient has to be accepted.
Ramkrishn Textiles P.Ltd. vs. ITO (2011) 9 ITR (Trib) 321 (Mumbai) (Trib).
Source:
1. www.aiftponline.org
2.AIFTP TIMES Volume.No.2 July, 2011,Page No.6.
Our Comment:
Interest payment for borrowed capital for mutual funds arrangement with sister concern is allowable expenditure if is under commercial expediency
