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2017 (1) TMI 105 - ITAT PUNEDisallowance made under section 36(1)(iii) - interest paid on borrowed capital on account of alleged interest free advance given to related parties - Held that:- In the facts and circumstances of the present case because of direct nexus between the OD limits raised by the assessee and its direct utilization for making interest free advances to Shri R.C. Khinvasara, the interest relatable to the said advances merits to be disallowed in the hands of assessee. Accordingly, the disallowance of interest paid on borrowed capital on account of alleged interest free advance given to related parties is upheld in the hands of assessee. Since direct nexus is established between interest free advances made by the assessee out of interest bearing funds, there is no merit in the reliance placed upon by the learned Authorized Representative for the assessee on the ratio laid down by the Hon’ble Bombay High Court in CIT Vs. Reliance Utilities & Power Ltd. (2009 (1) TMI 4 - BOMBAY HIGH COURT). - Decided against assessee
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