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2023 (2) TMI 763 - AT - Income TaxAddition of interest - assessee had granted interest free loan to subsidiaries - Since the assessee was paying interest @ 14% to the loans availed from the banks, AO charged the interest @ 14% on the interest free loans granted to its subsidiaries and disallowed the interest expenses - HELD THAT:- CIT(A) has observed that borrowed funds and own funds were kept in common kitty and therefore, it cannot be said that the interest free advances were only out of own funds. Claim of the assessee before the authorities below is that the assessee had granted interest free loans to its subsidiaries out of its own fund and borrowed funds were utilized for acquiring capital assets. It is not in dispute that the interest free funds available to the assessee were sufficient to meet its investment and thus, it could be presumed that the investments were made from the interest free funds available with the assessee. Our view is duly fortified by Reliance Industries Ltd. [2019 (1) TMI 757 - SUPREME COURT], wherein, similar findings of the Tribunal were duly affirmed by the higher Courts. Under the above facts and circumstances, the addition made towards disallowance of interest stands deleted. Appeal filed by the assessee is allowed.
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