Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2020 (11) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2020 (11) TMI 810 - AT - Income TaxInterest disallowance u/s 36(1)(iii) - assessee did not file any fund flow statements in support of the submissions that own funds were used to make the investments in certain premises, against which the disallowance has been computed by lower authorities - HELD THAT:- The perusal of assessee’s financial statements would show that the assessee has own funds in the shape of share capital & reserves aggregating to ₹ 225.28 Crores at year end as against opening funds of ₹ 153.15 Crores. Besides the above funds, the assessee has interest free unsecured loans of ₹ 58.72 Crores at its disposal at year end. As against this, the capital advances at year end stood at ₹ 20.23 Crores as against opening balance of ₹ 19.83 Crores which would show that there was only a marginal increase of ₹ 40 Lacs during the year. Further, the interest-bearing secured loans obtained by the assessee were meant only for specific purposes i.e. packing credit or post-shipment credit. It could very well be concluded that there was no nexus of borrowed funds with the capital advances made by the assessee and the assessee had sufficient own funds to make the aforesaid investments. Without establishing any direct nexus of borrowed funds vis-à-vis capital advances, no such disallowance could have been made by revenue authorities. Thus interest disallowance is not sustainable in law. By deleting the same, we allow the appeal of assessee.
|