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2013 (8) TMI 518 - AT - Income TaxDisallowance of interest expenditure - CIT upheld proportionate interest - Held that:- Assessee has granted interest free loan to a related party - there was sufficient fund available with the company in the form of reserves and surplus. Further nothing has been brought on record by Revenue to prove that interest bearing loans taken by the Assessee for the purpose of own business has been diverted for non business purposes or for lending to related party - No direct nexus has been proved either by Assessing Officer or by CIT(A) between the interest bearing loans taken and the interest free loans granted - If there are funds available both interest free and over draft and or loans taken than a presumption would arise that investment would be out of interest free fund generated or available with the company, if the interest free funds were sufficient to meet the investment - No disallowance can be made - Following decision of CIT vs. Raghuvir Synthetics [2013 (7) TMI 806 - GUJARAT HIGH COURT] - Decided in favour of assessee.
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