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2018 (5) TMI 754 - ITAT MUMBAIAddition on account of interest free advances to group companies - advanced free of interest /investments made by the assessee in its subsidiary companies - interest bearing funds have been used for making interest free advances / investments with group companies - Held that:- The advances/investments in subsidiary companies to the tune of ₹ 7.29 crores is a minor investment (less than 10%) vis-a-vis owned funds to the tune of ₹ 126.86 crores. Under these circumstances and factual matrix of the case as is detailed in extenso above, presumption shall apply that the assessee has invested its own interest free funds towards advancing money to its subsidiary company to the tune of ₹ 79 lacs as well for making investments in subsidiary companies to the tune of ₹ 6.50 crores and no disallowance of interest expenses are warranted. Revenue is not able to rebut the said presumption as no incriminating material is brought on record to evidence that interest bearing funds are used for making such advances/investments in subsidiary companies. There shall be presumption that the assessee invested its own funds for making interest free advances to the tune of ₹ 79 lacs in its subsidiary company and for making investments to the tune of ₹ 6.50 crores in its subsidiary companies to acquire controlling interest. See CIT v. Reliance Utilities and Power Ltd. (2009 (1) TMI 4 - BOMBAY HIGH COURT) and HDFC Bank [2014 (8) TMI 119 - BOMBAY HIGH COURT] - Decided in favour of assessee.
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