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JUDGMENT L. Narasimha Reddy, J. - The respondent is a private limited company and is assessed to tax. For the assessment years 1992-93 it claimed the deduction of the component of interest on the loans borrowed for its business. The assessing officer disallowed the deduction on the ground that the respondent lent and advanced substantial amounts to its sister concern, without charging interest. Aggrieved by the order of assessment, the respondent filed appeal before the Commissioner of Appeals. The Commissioner allowed the appeal through order, dated 31.01.1996. The said order was challenged by the Revenue before the Visakhapatnam Bench of the Income Tax Appellate Tribunal by filing ITA No.1248 of 1996 and 806 of 1997. The Tribunal dismissed the appeals through common order dated 11.02.2002. Hence these appeals under Section 260(A) of the Income Tax Act. 2. Sri S.R. Ashok, learned senior counsel appearing for the appellant, submits that once the respondent did not dispute that it has advanced amounts to its sister concern, a presumption has to be drawn to the effect that the amount borrowed by it from a bank was not for the purpose of its business. He contends that non-levy of interest on the amount advanced by the respondent to its sister concern is nothing but a camouflage to pass on the amount borrowed by it to its sister concern and in that view of the matter, it cannot be said that the amount was, in fact, borrowed for the benefit of its sister concern itself and thereby the respondent is not entitled to claim deduction of interest. 3. Sri A.V. Krishna Koundinya, learned counsel for the respondent, on the other hand, submits that the Revenue failed to establish that there was any nexus or link between the amount borrowed by the respondent from the financial institution on the one hand and the amount advanced by it to its sister concern on the other hand. He submits that the Commissioner and the Tribunal have taken correct view of the matter and no interference is warranted with the order under appeal. 4. The Act permits deduction of component of interest on the loans borrowed by an assessee, provided, the amount was borrowed for the purpose of business. If…

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