Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2021 (7) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2021 (7) TMI 572 - ITAT PUNEDisallowance of interest - appellant company had diverted interest bearing funds to sister concerns / related parties by advancing loans and advances - HELD THAT:- In view of the settled position of law that the disallowance, if any, u/s 36(1)(iii) of the Act can be made only to the extent of incremental loans and advances made during the previous year relevant to the assessment year under consideration - The opening balance of loans and advances of sister concerns / related parties should not be considered for the purpose of making, any disallowance for the year under consideration. It is settled position of law that where there is a mixture of both borrowed funds as well as the interest free funds are available, a presumption has to be drawn that investments are made out of the interest free funds as held in the case of CIT Vs. Reliance Utilities [2009 (1) TMI 4 - BOMBAY HIGH COURT] and similar is the decision of Munjal Sales Corporation [2008 (2) TMI 19 - SUPREME COURT]. Therefore, no disallowance u/s 36(1)(iii) is called for in the light of the above legal settled position of law and facts of the case in respect of the incremental loans and advances made to the sister concerns / related parties during the previous year relevant to the assessment year under consideration. - Appeal filed by the assessee is allowed.
|