here assessee after taking loan from bank gave interest-free advances to its sister concern

IT: Where assessee after taking loan from bank gave interest-free advances to its sister concern which had gone into huge loss and there was no commercial expediency in advancing such loan, interest attributable to such loan was to be disallowed
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[2014] 49 taxmann.com 21 (Punjab & Haryana)
HIGH COURT OF PUNJAB AND HARYANA
C. R. Auluck and Sons (P.) Ltd.
v.
Commissioner of Income-tax*
AJAY KUMAR MITTAL and Jaspal Singh, jj.
IT Appeal No. 128 of 2011 (O & M)†
OCTOBER  23, 2013
Section 36(1)(iii) of the Income-tax Act, 1961 - Interest on borrowed capital (Interest-free loan to sister concern) - Assessment year 2005-06 - Assessee and its sister concern had taken independent credit limits from bank - Assessee along with two group concerns stood guarantor to credit limits advanced to sister concern - Sister concern had gone into huge loss and its bank account was proposed to be declared as non-performing asset - Assessee took a loan from bank and gave interest-free advances to sister concern - Whether there was no commercial expediency in advancing loan by assessee to sister concern and, therefore, interest attributable to such loan was to be disallowed under section 36(1)(iii) - Held, yes [Paras 7 & 11][In favour of revenue]