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2017 (2) TMI 558 - AT - Income TaxDisallowance u/s 36(1)(iii) on account of the loans and advances given to the relatives interest-free - Held that:- The facts could not be disputed by the authorities below as also by the learned Departmental representative that the appellant was having interest-free funds to the extent of ₹ 9,91,01,938 as against which the interest-free loans and advances given to the relatives and directors etc. were only of ₹ 2,07,64,779, which were far below the interest-free funds. The objection of the authorities below that the assessee could not prove a nexus between the availability of interest-free funds and giving of interest-free advances, does not appear to be a requirement of the law inasmuch as it is by now settled that when there are interest-free funds available to the assessee sufficient to meet its investments or loans, it can be presumed that such investments came out of the available interest-free funds and not out of the interest bearing funds/overdraft account. The co- ordinate Bench of the Jaipur Income-tax Appellate Tribunal in the case of Ram Kishan Verma (2012 (6) TMI 534 - ITAT JAIPUR ) held that the assessee was having sufficient capital and there were mixed funds then non-interest bearing funds are to be considered as utilised for non-interest bearing advances. It is the assessee who has to take a business decision. There is no onus on the assessee to establish a nexus. The disallowance under challenge made by the Assessing Officer under section 36(1)(iii) and confirmed by the Commissioner of Income-tax (Appeals) was not justified - Decided in favour of assessee
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