JUDGMENT : K.S. Jhaveri, J. 1. Being aggrieved and dissatisfied with the impugned judgment and order passed by the Income Tax Appellate Tribunal, Ahmedabad Bench 'B' (hereinafter referred to as ITAT) dated 05.06.2009 in ITA No. 2205, 2206, 2208 & 2209/Ahd/2007 for the Assessment Year 1998-99, 1999-00, 2001-02 and 2002-03 respectively, the revenue has preferred the present Tax Appeals. 2. The main issue involved in the consideration of these appeals is as to whether the Tribunal is right in law and on facts in confirming the order passed by CIT(A) in deleting the addition made on account of disallowance of interest relating to the borrowed funds which is diverted to the sister concern, without charging interest. 3. The Tribunal had dismissed the appeals filed by the revenue against the decision of CIT(A) deleting additions made on account of disallowance of interest relating to the borrowed funds diverted to the sister concern without charging interest. Being aggrieved and dissatisfied with the impugned judgment and order passed by the ITAT, the revenue has preferred the present Tax Appeals for consideration of the aforesaid substantial question of law. 4. Mr. Nitin Mehta, learned advocate appearing for the revenue has drawn the attention of this Court to para 6 of the assessment order and submitted that the company had advanced loans to subsidiary/other companies and therefore the assessee was asked to furnish details and explain the advances. He submitted that the assessee vide its written submissions stated as under:- (Rs. In Lacs) Share Capital 3398.79 Reserves & Surplus (Share premium, capital reserve, capital redeem reserve etc.) 31218.54 Total 34617.33 (Rs. In Lacs) Gross investment in fixed assets 97202.22 Inventories 3422.24 Receivables 10009.15 Total 110633.61 4.1 The Assessing Officer in para 6 of the assessment order has further observed as under: "... As shown above, above advances have been taken by the company wholly and exclusively for the purpose of the business of the company. The advances have been given for sufficient, adequate and apparent consideration and therefore the same are not in the nature of loans. As shown above, above advances have been taken by the company wholly and exclusively for the purpose of the business of the company. The advances have been given for sufficient, adequate and apparent consideration and therefore the same are not in the nature of loans. By advancing these amounts the company had obtained benefit by way of acquisition of international business for export (Which increased company's turnover and profitability), development of all India distribution network, participation in a project for manufacture of a component required for company's products, acquisition of facilities by way of office buildings etc and research and development work for company's products. 4.2 Mr. Mehta submitted that the CIT(A) as well as the Tribunal have committed an error in deleting the disallowance based on the assessment year 1996-97. He submitted that the Tribunal has erred in relying on the decision of the Apex Court in the case of Munjal Sales Corp. v. Commissioner of Income Tax reported in, [2008] 298 ITR 298 (SC) in view of the fact that the facts of the case of the assessee are not identical to the facts of the case relied upon by the Tribunal. 5. Mr. S.N. Soparkar, learned Senior Counsel appearing with Mr. B.S. Soparkar, learned advocate on behalf of the respondent - assessee has submitted that the advances were either for commercial expediency to its sister concern or the assessee was having surplus interest free funds available with it. He has relied upon a decision of this Court in the case of Commissioner of Income Tax v. Raghuvir Synthetics Ltd. reported in, [2013] 354 ITR 222 (Guj). 6. Having heard Mr. Mehta, learned advocate appearing on behalf of the Department and Mr. Soparkar, learned Senior Advocate appearing on behalf of the assessee and the question posed for consideration by us we are of the opinion that the Tribunal has not committed any error in deleting the addition made on account of disallowance of interest relating to the borrowed funds which is diverted to the sister concern without charging interest. Soparkar, learned Senior Advocate appearing on behalf of the assessee and the question posed for consideration by us we are of the opinion that the Tribunal has not committed any error in deleting the addition made on account of disallowance of interest relating to the borrowed funds which is diverted to the sister concern without charging interest. In the case of Raghuvir Synthetics Ltd. (supra), this Court has held as under: "We may refer to the judgment of Apex Court at this stage given in case of S.A. Builders Ltd. v. Commissioner of Income Tax (Appeals) reported in, 288 ITR 1 (SC) where the question was whether interest on funds borrowed by the assessee to give an interest free loan to sister concern should be allowed as deduction and the Apex Court ruled thus: "We have considered the submission of the respective parties. The question involved in this case is only about the allowability of the interest on borrowed funds and hence we are dealing only with that question. In our opinion, the approach of the High Court as well as the authorities below on the aforesaid question was not correct. xxx In our opinion, the High Court in the impugned judgment, as well as the Tribunal and the Income Tax Authorities have approached the matter from an erroneous angle. In the present case, the assessee borrowed the fund from the bank and lent some of it to its sister concern (a subsidiary) on interest free loan. The test, in our opinion, in such a case is really whether this was done as a measure of commercial expediency. xxx The expression "commercial expediency" is an expression of wide import and includes such expenditure as a prudent businessman incurs for the purpose of business. The expenditure may not have been incurred under any legal obligation, but yet it is allowable as a business expenditure if it was incurred on grounds of commercial expediency. xxx The expression "commercial expediency" is an expression of wide import and includes such expenditure as a prudent businessman incurs for the purpose of business. The expenditure may not have been incurred under any legal obligation, but yet it is allowable as a business expenditure if it was incurred on grounds of commercial expediency. xxx We agree with the view taken by the Delhi High Court in CIT v. Dalmia Cement (Bhart) Ltd., (2002) 254 ITR 377, that once it is established that there was nexus between the expenditure and the purpose of the business (which need not necessarily be the business of the assessee itself), the Revenue cannot justifiably claim to put itself in the arm-chair of the businessman or in the position of the board of directors and assume the role to decide how much is reasonable expenditure having regard to the circumstances of the case. No businessman can be compelled to maximize its profit. The Income Tax Authorities must put themselves in the shoes of the assessee and see how a prudent businessman would act. The authorities must not look at the matter from their own viewpoint but that of a prudent businessman. As already stated above, we have to see the transfer of the borrowed funds to a sister concern from the point of view of commercial expediency and not from the point of view whether the amount was advanced for earning profits." Accordingly, the question is answered in favour of the assessee by the Apex Court. In this Tax Appeal it is to be specified here that considering the material on record and keeping in view substantial interest free funds and business expediency that the CIT(A) and Tribunal held the issue in favour of assessee. There is absolutely no perversity in such findings. On the contrary, they are conforming to the well laid down guiding principle on the subject. In the premise, question of law needs to be answered in favour of assessee and against the Revenue. Tax Appeal is dismissed accordingly and stands disposed of. " 6.1 From the above, it is clear that the Tribunal has correctly approached the issue which has been proposed in the present Tax Appeals. When there was no evidence brought on record by the Department for the Tribunal to hold otherwise, we hold that the issue is appropriately concluded in favour of the assessee and against the Revenue. " 6.1 From the above, it is clear that the Tribunal has correctly approached the issue which has been proposed in the present Tax Appeals. When there was no evidence brought on record by the Department for the Tribunal to hold otherwise, we hold that the issue is appropriately concluded in favour of the assessee and against the Revenue. The Tribunal has rightly relied upon the decision of the Apex Court in the case of Munjal Sales Corporation (Supra). It is borne out that the advances were either for commercial expediency given to its sister concern or the assessee was having surplus interest free funds. The issue is therefore squarely covered by the aforesaid two decisions. 7. In view of the above, the question raised for consideration in the present appeals are answered in favour of the assessee and consequently, the impugned judgment and order passed by the ITAT is confirmed. Hence, the present Tax Appeals are dismissed. No costs.