SC decision on 05-11-2015 on 36(1)(iii) in the case of Hero Cycles (P) Ltd. The apex court observed that interest free advance to sister concern under margin money stipulation by bank for granting of loan to sister concern qualifies the test of commercial expediency. Further loan to director from bank account out of credit balance available on the day of advance can not be said to be advance from borrowed capital. Hence no disallowance u/s 36(1)(iii). Further SC reprimanded P&H High Court for disallowance by mentioning Abhishek Industries only without mentioning facts of the case. SC followed its own judgement in SA Builders 288ITR1 for test of commercial expediency and includes expenditure incurred otherwise than by legal obligation. SC also quoted Malyalam Plantation 53 ITR 140 which held that “for the purpose of business” is wider than “for the purpose of earning profits” SC further quoted Delhi High Court in Dalmia Cement 254 ITR 377 which held that for the purpose of business need not necessarily mean the business of assesee itself. SC also held that 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. It further held that no businessman can be compelled to maximize his profit and that 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 view point but that of a prudent businessman.