Commercial expediency sustained interest waiver on a subsidiary's debit balance, with the disallowance upheld as unjustified.

Interest foregone on a subsidiary's debit balance was treated as commercially expedient because the subsidiary had a weak financial position, and the Tribunal's deletion of the disallowance was upheld. The reference was stated to be covered by the Court's earlier decision involving the same assessee and the same point. The legal issue was answered in the affirmative, confirming that the interest disallowance could not be sustained on these facts and that the assessee's commercial expediency explanation prevailed over the Revenue's objection.

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Issues: Whether the Tribunal was justified in confirming deletion of the disallowance of interest on the debit balance of a subsidiary company, on the basis of commercial expediency.

Analysis: The Tribunal found that the assessee had foregone interest on the debit balance of its subsidiary because of the subsidiary's weak financial position and for commercial expediency. The question referred was similar to an earlier reference involving the same assessee and was covered by the Court's prior decision on the same point.

Conclusion: The question was answered in the affirmative, in favour of the assessee and against the Revenue.

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