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TMI Blog2014 (8) TMI 119X X X X Extracts X X X X X X X X Extracts X X X X ..... to Assessment Years 2001-02, 2002-03, 2003-04, 2004-05 and 2005-06. 2. Mr Suresh Kumar, the learned counsel appearing on behalf of the Appellant, submitted that the impugned order passed by the ITAT requires interference and gives rise to substantial questions of law that need to be answered by this Court and read as under :- "(A) Whether on the facts and in law, the Hon'ble Tribunal was correct in holding that the investment in tax free securities/investments are represented by assessee's own funds in the shape of share capital and reserves, ignoring the fact that the assessee is a bank involved in transactions of money in various forms and treasury operations is only out of its functions ? (B) Whether the ITAT was correct in la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed from the common pool having both borrowed as well as own funds of the Assessee and therefore, proportionate disallowance of interest by the Assessing Officer was fully justified. He therefore submitted that the CIT (Appeals) & the ITAT had gone wrong on this count that required interference by this Court. 4. We do not agree. In the case at hand, as recorded by the ITAT, undisputedly the Assessee's own funds and other non-interest bearing funds were more than the investment in the tax free securities. The ITAT therefore held that there was no basis for deeming that the Assessee had used the borrowed funds for investment in tax free securities. On this factual aspect, the ITAT did not find any merit in the contention raised by the Rev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompanies. It was pointed out that the income from the operations of the Assessee was Rs. 313.53 crores and with the availability of other interest free funds with the Assessee the amount available for investments out of its own funds were to the tune of Rs. 398.19 crores. In view thereof, it was submitted that from the analysis of the balance-sheet, the Assessee had enough interest free funds at its disposal for making the investments. The CIT (Appeals) on examining the said material, agreed with the contention of the Assessee and accordingly deleted the addition made by the Assessing Officer and directed him to allow the same under the provisions of the Income Tax Act, 1961. The Revenue being aggrieved by the order preferred an Appeal befo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er draft account of the assessee and in such a case it should be presumed that the taxes were paid out of the profits of the year and not out of the overdraft account for the running of the business. It noted that to raise the presumption, there was sufficient material and the assessee had urged the contention before the High Court. The principle, therefore, would be that if there were funds available both interest-free and over draft and/or loans taken, then a presumption would arise that investments would be out of the interest-free funds generated or available with the company if the interest-free funds were sufficient to meet the investment. In this case this presumption is established considering the finding of fact both by the Commiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orted in (2002) 258 ITR 601. On going through the said judgment, we find that question (B) reproduced above and projected as substantial by Mr Suresh Kumar is squarely answered by the judgment of this Court in the case of American Express International Banking Corporation (supra). In view thereof, we do not find that even question (B) gives rise to any substantial question of law that needs to be answered by this Court. 7. As far as question (C) is concerned, we find that an identical question of law was framed and answered in favour of the Assessee by this Court in its judgement dated 4th July, 2014 in Income Tax Appeal No.1079 of 2012, Commissioner of Income Tax-2 v/s M/s Lord Krishna Bank Ltd. (now merged with HDFC Bank Ltd.). Mr Suresh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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