Tax Tribunal Allows Interest Expense Claims When Business Advances Were Interest-Free Despite Having Interest-Bearing Loans.

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....ITAT upheld deletion of interest expense disallowance where assessee provided interest-free advances while having interest-bearing loans. The advances were given with commercial expediency for business ventures with profit expectations. Tribunal noted sufficient interest-free funds were available with assessee exceeding outstanding amounts. Regarding provision for expenses, ITAT confirmed that under mercantile accounting system, provision for known expenses is mandatory even without actual payment. The scientific basis for year-end provisions was accepted as routine practice following accounting principles. Previous years' treatment of both interest-free advances and provision for expenses supported assessee's position. Revenue's appeal dismissed, ruling in favor of assessee on both grounds of commercial expediency and accounting methodology.....