During the year, the assessee company had invested in shares of another company. The AO was of the opinion that the shares had been acquired using borrowed funds and the assessee failed to prove commercial expediency and therefore proceeded to make disallowance under section 36(1)(iii). On appeal, the assessee argued that it had made investments in a company in the same line of business and therefore the acquisition, funded by borrowed monies satisfies the criteria of commercial expediency. The CIT(A) concurred with the assessee’s view and deleted the disallowance made by the AO. On appeal by the Department, the Hon’ble Tribunal adjudicated the matter in favour of the assessee holding that an investment in equity share capital of another company (whether in the same line of business or not) is different in nature and character from an interest free advance/ loan to another company. The question of diversion of funds for non-business purposes would only come into play in the case of the latter and not in the former. Further, whether such an investment yields returns in the present year or not also would not make a difference..(AY. 2017-18)