Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2013 (5) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2013 (5) TMI 615 - AT - Income TaxDisallowance of interest u/s 36(1)(iii) - whether interest free funds were available at the time of making investments is a pure question of facts which can be analysed by taking into consideration the day-to-day cash flow statement? - CIT(A) allowed the claim - Held that:- The assessee’s share capital, reserves and surplus as on the first day of the accounting year is Rs.33.50 crores and investment in assets is only to the tune of Rs.27.05 crores it cannot be inferred that a sum of Rs.6.45 crores is available with the assessee. There is a possibility that the assessee might have purchased raw material, etc. and there may not be any cash available as on the first day of the accounting year. The current year’s profit is not an item available throughout the year and it cannot be a fixed sum. Ordinarily, the amount available with the assessee is recycled or utilised in purchase of raw material, etc. Even at the end of the year current year’s profit may not be available with the assessee since it would have been utilised for different purposes. In fact CIT(A) mentioned that the assessee maintained cash credit accounts in the ‘consortium of banks’ which are required to be looked into as to whether in a particular bank account the assessee had deposited any money or not and whether common funds, i.e. interest free funds and interest bearing funds are available in that account and if the assessee is able to prove that from the said common funds investments were made, then certainly the decision of CIT vs. Reliance Utilities and Power Ltd. [2009 (1) TMI 4 - HIGH COURT BOMBAY] can be applied in principle. Since these facts were not properly brought on record, in the interest of justice it reasonable to set aside the matter to the file of the AO with a direction to call for details and after analysing the consortium of accounts as well as daily cash flow statements decide the issue in accordance of law - appeal filed by the Revenue is treated allowed for statistical purpose.
|