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2019 (4) TMI 1784 - AT - Income TaxDisallowance of interest u/s. 36(1)(iii) - HELD THAT:- It is not in dispute that the assessee has sufficient interest free funds for making investments or for advancing loans to sister concerns. This fact is not disputed by the Revenue. In view of the of the decision in the case of CIT v. Reliance Utilities and Power Ltd. [2009 (1) TMI 4 - BOMBAY HIGH COURT] wherein it has been held that, if assessee has sufficient interest free funds to meet its investments and assessee had raised a loan it may be presumed that the investments were made from interest free funds available to the assessee. In view of this position, we are of the view that the CIT(A) had rightly deleted the disallowance. Hence, we reject the ground raised by the Revenue on this issue. Disallowance of interest - assessee paid interest to the creditors and no interest has been charged on debtors - HELD THAT:- U/s 36(1)(iii) to sustain a claim for deduction of the amount of interest, all that is necessary is that the capital must have been borrowed by the assessee, it must have been borrowed for the purpose of business or profession of the assessee and thirdly, that the assessee should have paid that amount by way of interest. Consideration for paying interest to trade creditors and for not charging interest from trade debtors can be different, and therefore, just because the assessee has not charged interest from its trade debtors, interest paid by it to it trade creditors could not be disallowed as a deduction especially when there is no dispute about the genuineness of the payment. Therefore, we confirm the order of the CIT(A) and dismiss the department appeal
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