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2015 (1) TMI 1380 - AT - Income TaxDisallowance invoking section 36(1)(iii) - disallowing interest expenditure - Held that:- Relying on the decision of the Bombay High Court in the ca e of IT vs. Reliance Utilities & Powers Ltd. (2009 (1) TMI 4 - BOMBAY HIGH COURT), wherein it was held that if there were funds available both interest-free and overdraft and/or loans taken, then a presumption would arise that investments would be out of the interest-free funds generated or available with the company, if the interest-free funds were sufficient to meet the investments. In the present case the investment in office premises is only 1.18% of the own funds of the assessee company in the year under consideration and therefore the presumption would arise that the assessee company has invested its own funds in purchasing the office premises and not used the borrowed funds and therefore, no portion of interest paid on borrowings can be disallowed invoking section 36(1)(iii) of the Act. No justification in the disallowance made u/s.36(1)(iii). - Decided in favour of assessee.
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