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2017 (5) TMI 302 - HC - Income TaxInterest free loans and advances - Held that:- In the present case, the Assessing Officer did not carry out the necessary exercise. The Assessing Officer, in fact, granted partial relief and for the balance without carrying out the necessary exercise, he has disallowed the same and made an addition. The Commissioner of Income Tax (Appeals) found that this addition cannot be sustained both on facts and in law. The loans were given in the earlier year and there was sufficient general reserve available for investment. If the Assessing Officer did not make any efforts to show any nexus between the borrowing and the subsequent advancing of loans to the subsidiary company, then, the disallowance made by the Assessing Officer had to be deleted. We do not think that the Tribunal's exercise of maintaining the order of the Commissioner of Income Tax (Appeals) raises any substantial question of law. More so, when it was ascertained that no interest bearing funds were released for advancing the sums to the subsidiary company or its related company on account of share application money.The assessee had sufficient reserves. - Decided against revenue
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