TMI Blog2015 (1) TMI 1380X X X X Extracts X X X X X X X X Extracts X X X X ..... rdraft 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 investments. In the present case the investment in office premises is only 1.18% of the own funds of the assessee company in the year under consideration and therefore the presumption wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the assessee is engaged in the business of trading, processing and exporting cut and polished diamonds, filed its return of income for A.Y.2006-07 on 30-11-2006 declaring total income of ₹ 17.27 crores. On scrutinizing the said return the AO disallowed ₹ 1,05,00,150/- u/s. 14A of the Act and disallowed interest u/s.36(l)(iii) of the Act of ₹ 9,45,028/-. The CIT(A) partly all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any had paid the aggregate sum of ₹ 2,40,75,000/- till 31-3-2005. The assessee company paid further sum of ₹ 14,65,000/- during the year ended 31-3-2006. The AO invoked section 36( 1 )(iii) of the Act and observed that the assessee company has used the borrowed funds in purchasing the office premises which are not put to use in the year ended 31-3-2006 and therefore, a portion of inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t during the year ended 31-3-2006 the assessee company has earned profit after interest, depreciation and tax of ₹ 22.25 crores which was available for making investment of ₹ 14,65,000/- in the office premises. 7. Relying on the decision of the Bombay High Court in the ca e of IT vs. Reliance Utilities Powers Ltd. (313 ITR 340), wherein it was held that if there were funds availab ..... X X X X Extracts X X X X X X X X Extracts X X X X
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