ALLOWABILITY OF INTEREST PAID U/S 36(1)

Hi,

If the aggregate of Capital&Current account of the firm is in credit balance and if such credit balance is more than the amount given to the brother then the amount so given can be either regarded as drawings instead of showing it in the books as advance to the relative

or

If you are able to prove that the advance given is for business purposes only then there is no problem if you have sufficient credit balance in the Capital front. You can argue that the loan is out of the fund brought in by partner or out of internal accruals.