TaxTMI 
TaxTMI 
2014 (4) TMI 680
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...., J. 1. The following question of law was framed on 25.3.2014:- "Whether the Tribunal fell into error in setting aside the disallowance under Section 36(1)(iii) of the Income Tax Act, 1961 to the tune of Rs.31,39,988/- in the circumstances of the case?" 2. Against the assessment to income tax made for the assessment year 2001-02 by order dated 23.2.2004, the assessee filed an appeal which went ....
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....ance under section 36(1)(iii) was made on the ground that the assessee had given interest-free advances to its subsidiaries and two holding companies out of interest-bearing funds, which were not for the purposes of the business and to that extent the assessee was not entitled to the deduction. These disallowances were confirmed by the CIT(Appeals) and in further appeal the Tribunal in its order d....
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....vanced to the subsidiary companies without interest but since the subsidiary companies were under the same management and were engaged in similar business of entertainment/distribution of pay channels, the interest-free advances must be taken to have been given as part of the corporate or business strategy for expanding the business operations of the assessee through the subsidiaries. It according....
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....of the Supreme Court and of this Court, is that the advancing of interest-free monies to the subsidiary companies was driven by business considerations since the subsidiaries were also engaged in the same business in which the assessee was engaged. The Tribunal accordingly held that it would be in the interest of business of the assessee and certainly would be commercially expedient for the assess....