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2016 (12) TMI 1833 - AT - Income TaxDisallowance of interest expenses - interest @ 15% p.a. on advances given to various parties on which no interest has been charged - HELD THAT:- Interest-free own funds available at the disposal of the assessee stands at ₹ 352.91 lakhs as on 31/03/2008 and ₹ 507.94 lakhs as on 31/03/2009. The corresponding interest-free advance as on 31/03/2009 stands at ₹ 21.10 lakhs. In such a situation, where interest-free own funds available to the assessee are far in excess of the interest-free advance, the presumption would arise in favour of assessee that the advances were made from interest-free funds available with the assessee. On this issue, we find guidance from the judgement of Hon’ble Bombay High Court in the case of CIT vs. Reliance Utilities and Power Ltd. [2009 (1) TMI 4 - BOMBAY HIGH COURT] - In view of the huge funds available with the assessee without any interest liability - Thus, the disallowance of interest towards interest-free advance is uncalled for - Decided in favour of assessee.
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