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2015 (10) TMI 997 - ITAT AGRAAddition made on interest free loan to M/s Uma Overseas - Held that:- As decided by Tribunal in assessee’s own case for A.Y. 2007-08 [2015 (10) TMI 995 - ITAT AGRA] it is an undisputed position that interest free funds available to the assessee are far in excess of the interest free advances given by the assessee. In the documents filed before us, it is shown that the assessee had a capital of ₹ 176 lakhs and business profit of ₹ 82.45 lakhs, and both these amounts put together are far in excess of the interest free investments made by the assessee. With these undisputed facts in mind, let us take a look at the legal position laid down by Hon’ble Bombay High Court, in the case of CIT Vs Reliance Utilities & Power Ltd (2009 (1) TMI 4 - HIGH COURT BOMBAY), as stated thus, “The principle therefore would be that if there are funds available both interest-free and overdraft and/or loans taken, then a presumption would arise that investments would be out of the interest-free fund generated or available with the company, if the interest-free funds were sufficient to meet the investments”. On the basis of this principle, as has been consistently held by coordinate benches of this Tribunal, as long as interest free funds available to an assessee are in excess of the non business investments or interest free advances, presumption has to be that investments or interest free advances are out of interest free advances, and, accordingly, disallowance in respect of interest paid on borrowings cannot be made on the ground that the borrowed monies have not been used for business purposes. The impugned interest dis allowances are, accordingly, deleted - Decided in favour of assessee.
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