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2022 (12) TMI 629 - ITAT PUNEAddition of interest on interest free advances given by the assessee - CIT-A deleted the addition - AR submitted that the assessee has interest free funds available at its disposal and hence, the benefit of availability of such interest fee funds should be allowed in computing the disallowance of interest - HELD THAT:- The Hon'ble Bombay High Court in CIT vs. Reliance Utilities and Power Ltd. [2019 (1) TMI 757 - SUPREME COURT] has held that where an assessee possessed sufficient interest free funds of its own which were generated in the course of relevant financial year, apart from substantial shareholders’ funds, presumption gets established that the investments in sister concerns were made by the assessee out of interest free funds and, therefore, no part of interest on borrowings can be disallowed on the basis that the investments were made out of interest bearing funds. It is clear that where interest free funds are available with the assessee and there is net availability of funds, a presumption has to be drawn that the advance made for non-business purposes were advanced by such interest free funds available at the disposal of the assessee. We, therefore, setaside the impugned order and remit the matter to the file of the AO for examining the availability of interest free funds and then compute the disallowance of interest u/s.36(1)(iii) accordingly. Needless to say, the assessee will be allowed reasonable opportunity of hearing. Appeal is allowed for statistical purposes.
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