Disallowance of Interest-free advances made to sister concern

K. T. M. India Vs DCIT (ITAT Delhi)

If assessee has huge interest free funds including the profit earned by the assessee during the year which is sufficient to cover the advancement of loan, then no interest should be disallowed under section 36(i) (iii) for interest free advance to sister concern. ITAT followed  upreme Court in the case of Munjal Sales Corporation v. CIT (2008) 298 ITR 298 (SC).

FULL TEXT OF THE ITAT JUDGMENT

This appeal is filed by the assessee against the order dated 31/10/2011 passed by CIT (A)-Karnal, for Assessment Year 2008-09.

2. The grounds of appeal are as under:-

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