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2011 (2) TMI 62 - HC - Income TaxBusiness expediency – Interest on borrowed capital – Borrowing from sister concern paying higher rate of interest – Investment in shares of another sister concern carrying dividend at lower rate - Tribunal had committed illegality by deleting addition with regard to interest on loan taken from company of the assessee up and investing it in a sister concern was not expended exclusively for the purpose of earning income. Assessing Officer or the appellate authorities and even the courts can determine the true legal relation resulting from a transaction. If some device has been used by the assessee to conceal true nature of the transaction, it is the duty of the taxing authority to unravel the device and determine its true character. However, the legal effect of the transaction cannot be displaced by probing into the "substance of the transaction". The taxing authority must not look at the matter from their own view point but that of a prudent businessman. Each case will depend on its own facts. The exercise of jurisdiction cannot be stretched to hold a roving enquiry or deep probe.
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