TMI Blog2016 (10) TMI 1104X X X X Extracts X X X X X X X X Extracts X X X X ..... make advances it had made to its sister concern. This on the basis that the assertions of Respondent-Assessee to the above effect were not controverted before the Tribunal at the time of hearing nor in the remand report of the Assessing Officer. The impugned order of the Tribunal about availability of sufficient interest-free funds with the Respondent-Assessee to make advances to its sister co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s correct in deleting the disallowance u/s. 36(1)(iii)of the IT Act, 1961 when the nexus between interest bearing funds and interest free advances could even be indirect and such an indirect nexus would not preclude the AO from resorting to proportionate disallowance of interest? . 3. The Respondent-Assessee is engaged in the construction business. For the subject Assessment Year, the Responde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue to him for passing a fresh order on the above issue. This after examining the contention of the Assessee that it had its own surplus funds to make interest-free advances to its sister concerns. 5. Being aggrieved with the order of the CIT (A), both the Revenue and the Assessee filed appeals to the Tribunal. The grievance of the Assessee and Revenue was that there was no need for the CIT (A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d its own sufficient interest-free fund to make interest-free advances to its sister concerns. On the other hand, the Assessing Officer was directed to file its remand report, setting out why and how assertion of the Respondent-Assessee that it had sufficient interest-free funds available with it to make interest-free advances, is not correct. The parties carried out the above directions. 7. On ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have been made from interest-free funds available and not out of borrowed funds. Thus, holding that disallowance of partial interest paid on loan taken by the Respondent-Assessee, was not justified. 8. The above factual determination by the impugned order of the Tribunal about availability of sufficient interest-free funds with the Respondent-Assessee to make advances to its sister concerns, is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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