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2022 (8) TMI 944 - ITAT RAJKOTDisallowance u/s. 36(1)(iii) - computing proportionate interest expenditure incurred on borrowed capital corresponding to interest free advance given - as argued the appellant had adequate pool of interest free funds by way of share capital and reserves, which were far in excess of impugned interest free advance - HELD THAT:- If there are funds available, both, interest-free and overdraft and/or loans taken, then a presumption would arise that investments would be out of interest-free funds generated or available with company, provided said funds are sufficient to meet investments. Again ITAT in the case of Assetz Infrastructure [2020 (12) TMI 117 - ITAT BANGALORE] held that since the interest free funds available with the assessee is more than the interest free loans given to subsidiaries, it should have to be presumed that the loans have been given out of interest free funds. As in the case of CIT vs. HDFC Bank Ltd [2014 (8) TMI 119 - BOMBAY HIGH COURT]held that if the own funds and “interest free funds” available with the assessee is more than the investment in tax free securities, then it should be presumed that the said investments have been made out of interest free funds available with the assessee. In view of the consistent position taken by the Gujarat High Court and other Courts/ Tribunals discussed above, as applied to the facts of the instant case, in our considered view, no disallowance is called for in respect of interest expenses on account of being interest expenses for non-business purpose, when the assessee is having sufficient interest-free funds at the disposal in excess of amount given as interest free advances. Appeal of the assessee is allowed.
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