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2021 (3) TMI 724 - AT - Income TaxDisallowing proportionate interest expense claimed as a deduction u/s 36(1)(iii) - AO made the said disallowance on the ground that the assessee had utilized directly or indirectly, its interest bearing funds for giving interest-free loans - HELD THAT:- The Hon’ble Bombay High Court in the case of CIT v. Reliance Utilities & Power Ltd. [2009 (1) TMI 4 - BOMBAY HIGH COURT] has held in the context of section 36(1)(iii) of the Act that “if there is interest-free funds available to an assessee sufficient to meet its investment and at the same time the assessee had raised a loan it can be presumed that the investments were from the interest-free funds available”. The above ratio laid down by the Hon’ble Jurisdictional High Court is to be examined in the instant case. Therefore, we set aside the order of the Ld. CIT(A) on the above issue and restore the matter to the file of the AO to examine the applicability of the ratio laid down in Reliance Utilities & Power Ltd.(supra). We direct the assessee to file the relevant documents/evidence before the AO. Assessee appeal is allowed for statistical purposes.
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