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TMI Blog2014 (1) TMI 1283X X X X Extracts X X X X X X X X Extracts X X X X ..... n deleting addition of Rs. 63,26,146/- made u/s.36(i)(iii) of the Act being disallowance on interest-free loan relying on the decision of CIT-II, Baroda, in assessee's own case for A.Y. 2008- 09 without appreciating the fact that the decision of the ld.CIT cannot be binding precedent for other assessment years and the principle of res-adjudicata cannot be applied because each assessment year is a different assessment year and moreover, the decision of the CIT cannot be accepted as correct as the decision made u/s.264 in case of the above assessee for AY 2008-09 becomes applicable to that particular year. (ii) On the facts and in the circumstances of the case and in law, the learned CIT(A) has erred in appreciating that fact that the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t-free loan. 4. Ld.Sr.DR supported the order of the AO. On the contrary, ld.counsel for the assessee submitted that this issue is squarely covered in favour of assessee. He submitted that the assessee is having sufficient interest-free funds available for making advances to the sister-concerns. He further submitted that it is well settled by judicial pronouncements if the assessee is able to demonstrate that it has sufficient interest-free funds for advancing to the sister-concerns, then no disallowance of interest can be made. Ld.counsel for the assessee relied on the decision of the Hon'ble Bombay High Court rendered in the case of CIT vs. Reliance Utilities & Power Ltd. (2009) 313 ITR 340 (Bom). He has also relied on the decision of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t year 2008-09 by stating as follows: "However, the preponderance of judicial opinion is inclined to the view that where the assessee has sufficient non- interest-bearing funds available, disallowance could not be made on account of funds diverted to sister concern / subsidiary company. The decision of the Allahabad High Court in the case of CIT vs Prem Engg. Works (O) Ltd. 285 ITR 554 is relevant in this regard. Following its earlier decision in the case of CIT vs Radico Khaitan Ltd. 274 ITR 354, the Court laid down the preposition that where the amount of any interest-free loan is sufficiently covered with the non-interest-bearing funds available with the assessee, the question of disallowance of interest on borrowed funds would not aris ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he current year is also directed to be deleted." 6. We have given our thoughtful consideration to the facts and circumstances of the present case. The contention of the assessee is that it has sufficient interest-free funds and law is well settled that if the interest-free funds are available with the assessee, then disallowance in respect of the advances made to sister-concern is not justified. This contention of ld.counsel for the assessee has merit as it has been held by the Hon'ble Bombay High Court in the case of CIT vs. Reliance Utilities & Power Ltd. 313 ITR 340, if the interest free-fund is more than the borrowed fund, then no disallowance of interest is called for. Reliance is also placed on the judgement of Hon'ble Apex Court ren ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the contrary, ld.counsel for the assessee submitted that even otherwise also, no addition is called for on merits. He submitted that the expenditure was merely reimbursement, therefore on reimbursement of expenditure, provisions of tax deduction at source would not be applicable. In support of this contention, he placed reliance on the decision of Hon'ble Co-ordinate Bench of this Tribunal rendered in in the case of Karnavati Co-op.Bank Ltd. vs. DCIT and also ITA No.4252/Mum/2009 in the case of ACIT vs. M/s.J.B.Boda Surveyors Pvt.Ltd. 8. We have heard the rival submissions, perused the material available on record and gone through the orders of the authorities below. We find that the ld.CIT(A) has decided this issue after following the de ..... X X X X Extracts X X X X X X X X Extracts X X X X
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