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2017 (12) TMI 1560 - HC - Income TaxDisallowance of interest on interest bearing advances to subsidiary companies - Held that:- This Court in the CIT v. Reliance Utilities & Power Ltd. (2009 (1) TMI 4 - BOMBAY HIGH COURT) has held that where both interest free and interest bearing funds are available then a presumption would arise that the investment would have been made first by an Assessee out of the interest free funds available. This presumption would apply in the present case also. Thus no occasion to disallow proportionate interest paid on the amounts borrowed by the Respondent in proportion to the investment in its subsidiary companies can arise. Accordingly, question no.1 does not give rise to any substantial question of law as the issue stands concluded against the revenue by the decision of the Apex Court in S.A. Builders Ltd. (2006 (12) TMI 82 - SUPREME COURT) and of this Court in the case of Reliance Utilities & Power Ltd. (supra). Thus question (a) is not entertained. Disallowance u/s 14A r.w.r. 8D - Held that:- It is an admitted position between the parties that issue raised herein stands concluded in favour of the Respondent by the decision of this Court in the case of Godrej & Boyce Mfg. Co. Ltd. v. Dy. CIT [2010 (8) TMI 77 - BOMBAY HIGH COURT]. In the above case this Court has held that Rule 8(b) of the Income Tax Rules would apply with effect from Assessment Year 2008-2009 and prior thereto the disallowance for expenditure under Section 14A of the Act has to be done on reasonable basis. In this case the CIT (A) has made a reasonable disallowance of 5% of exempt income.
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