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2020 (6) TMI 831 - ITAT AHMEDABADDisallowance of Interest Expenses u/s 36(1)(iii) - interest free advances to the Appellant's sister concern - AO has alleged that the said advances have been made for non-business purposes and consequently, interest incurred thereon cannot be claimed as deduction - HELD THAT:- CIT(A), in first appeal, has confirmed the aforesaid action of disallowance by AO placing reliance on the order of the CIT(A) on similar facts concerning AY 2011-12 but the disallowance made by the Revenue authorities on similar facts has been reversed by the ITAT for the same assessee. Similar reversal of disallowance was stated to have been done by the co-ordinate bench [2019 (5) TMI 2000 - ITAT AHMEDABAD] concerning AY 2013-14. Also as pointed out on behalf of the assessee that interest free funds in the form of capital/reserves etc. is substantially in excess of the interest free advances given by the assessee. The interest free capital and reserves are stated to be in the vicinity of Rs.26 Crores as against the interest free advance of Rs.31 Lakhs in question. It was thus claimed that in the instant case, interest free funds available at the disposal of assessee are sufficient to meet the interest free advances and thus a presumption would arise that interest free advances were lent from interest free funds and not borrowed funds. In view of the decision of Reliance Utilities & Power Ltd. [2009 (1) TMI 4 - BOMBAY HIGH COURT] and similar approach adopted by the co-ordinate bench in earlier years, we find sufficient reasons to admit the claim of the assessee for reversal of disallowance favourably. Decided in favour of assessee.
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