Once nexus between expenses incurred and purpose of business was established, interest expenditure cannot be disallowed

Facts of the case: Assessee was engaged in the business of educational activities and declared an income of Rs.2,11,15,617/-. In the course of the assessment proceedings, it was noticed that assessee had given interest free advances and loans to its sister concerns and claim interest expenses accordingly. The assessee was required to explain the allowability of interest expenses in view of above. In view of thereof, the assessee was required to explain why expenses on interest on loan be allowed as an expenditure when there is a diversion of funds to Planman Group of Companies by the assessee...