2011 (1) TMI 326 - DELHI HIGH COURT

Disallowance - Interest on borrowed funds - The assessee was maintaining a bank account with mixed common funds in which all deposits and withdrawals were made - There was no specific instance noted by the Assessing Officer in respect of any direct nexus between the borrowed fund and the advances made to the subsidiaries - The Assessing Officer had made general observations without going into the depth of the matter and without pointing out any specific instance where an interest bearing borrowing was advanced to the subsidiaries or establishing that the borrowings made by the appellant were not for business purposes - The appellate authorities were of the view that the assessee had explained the sources of the advances and investments made to the subsidiaries, which could not be linked to the borrowed funds and that the advances were made out of the assessee's own capital - At the relevant time the assessee was found to be having an adequate non-interest bearing fund by way of Share Capital and Reserves - Even otherwise, the advances were found to be made to the subsidiaries for business considerations which is nothing but the commercial expediency of assessee - That being the factual position reflected from the record of the assessee, the onus that laid on it stood discharged - Decided in favour of assesee the appeals deserves to the dismissed and are hereby dismissed with no orders as to costs.