TMI Blog2018 (5) TMI 434X X X X Extracts X X X X X X X X Extracts X X X X ..... s undisputed fact that the own fund of assessee exceeds the amount of investment made in sister concerns as discussed in the order of CIT-A. Therefore, the presumption can be inferred that the own fund has been used in making the investment in sister concern. None of the investments in sister concerns had been made by the assessee out of borrowed funds. The ld. DR has also not brought anything on record contrary to the finding of ld. CIT-A. Therefore, there is no reason to make disallowance of the interest expense. - Decided against revenue. - ITA No.1553/Kol/2016 - - - Dated:- 3-5-2018 - Shri Waseem Ahmed, Accountant Member And Shri S.S.Viswanethra Ravi, Judicial Member For The Appellant : Soumyajitd Dasgupta, Addl. CIT-DR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ddharth Agarwal, Ld. advocate appeared on behalf of assessee. 2. Solitary issue raised by Revenue in this appeal is that Ld. CIT(A) erred in deleting the addition made by the Assessing Officer for ₹38,65,837/- on account of diversion fund. 3. Briefly stated facts are that assessee is a private limited company and holding dealership of Hyundai Motor. The assessee in the year under consideration has shown following investments:- Sl.No. Name of the company Cl. balance as on 31.03.12 Cl. Balance as on 31.03.11 (i) Bansal Automotives Pvt. Ltd. 22,47,250 22,47,250 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and therefore no disallowance can be made out of interest expense claimed by it. The assessee also submitted that its own fund including the free reserve and surplus exceeds the amount of investment made in the sister concern. Therefore, the presumption can be drawn that no borrowed fund has been utilized in making the investment in sister concern. The assessee in support of its claim furnished the details of its own fund vis- -vis investment made in sister concern, which is reproduced as under:- Particulars As on 31.03.12 As on 31.03.11 Share capital 1,76,87,000 1,29,65,000 Reserves and surplus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3.2 The submission of the assessee has been considered in the light of the facts of the case and the ratio of the case laws referred to. The assessee is a dealer of Hyundai Motors. The balance sheet of the assessee company reflects brought forward investments in the capital of four sister / group companies aggregating to ₹ 2,57,72,250/-. No fresh investment was made during the year in question. The AO, however, held that the assessee had diverted interest bearing funds towards investments in the shares of the sister / related companies and disallowed proportionate interest @ 15% even though there was no fresh investment in the relevant year. Ld. AR has contended that the assessee had its own interest-free funds of ₹ 6.72 c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rest bearing fund by giving non-interest bearing advances to its sister concerns. Therefore, the AO made the disallowance of interest expenditure as claimed by assessee corresponding to the interest free advance made by it to its sister concerns. However, the view taken by the AO was reversed by Ld. CIT(A) by observing that own fund of assessee exceeds the amount invested in its sister concerns. It is undisputed fact that the own fund of assessee exceeds the amount of investment made in sister concerns as discussed in the order of ld. CIT-A. Therefore, the presumption can be inferred that the own fund has been used in making the investment in sister concern. In holding so, we find support and guidance from the judgment of Hon'ble Bombay ..... X X X X Extracts X X X X X X X X Extracts X X X X
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