Payment of guarantee fees to holding company for loan advanced to third party is deductible u/s. 37

DCIT Vs Rabo India Finance Ltd (ITAT Mumbai) ITAT Mumbai held that guarantee fees paid to holding company for loan advanced by assessee to third party is commercial/ business expediency and hence allowable as deduction under Section 37 of the Income Tax Act. Facts- RIFL (assessee) had given a loan to third party ‘Noble Grain/Sidharth Soya’ and for the said loan, Rabobank Hong Kong had provided a guarantee that in case of default by the borrower entity. RIFL would recover the amount from Rabo Hong Kong RIFL had taken such a guarantee in order to protect its interest in case of default by bo...