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TMI Blog2019 (4) TMI 963X X X X Extracts X X X X X X X X Extracts X X X X ..... nk. 2. The A.O. noted that assessee-company had taken term loan from Catholic Syrian Bank of Rs. 275 lakhs and diverted the raised fund to TRR Properties Limited as an interest free advance. The interest paid on term loan was Rs. 19,90,220/- during the year. Since the raised fund had not been used by the assessee for its business purposes, the same was disallowed. 3. The assessee challenged the addition before Ld. CIT(A). The written submissions of the assessee is reproduced in the appellate order, in which the assessee explained that assessee-company is running a chain of restaurants by the name of "Ruby's Tuesday" and has various outlets throughout India. The restaurant at Mumbai called "CR-2 Unit" of Ruby's Tuesday was run in a rented ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... property at Mumbai. The assessee-company acknowledge the request of the subsidiary company in their meeting, in which it was decided to grant loan of Rs. 3.3 crores to its subsidiary company TRR Properties Ltd., on the condition that no rent for the Mumbai property being used by the assessee company be paid till the entire loan is paid on. The assessee company, accordingly, took loan from the Bank. Copy of the Rent Agreement and balance sheet were provided. M/s. TRR Properties Limited became a subsidiary of the assessee company on 26th March, 2010 i.e., in the year immediately preceding under appeal. The holding company i.e., assessee company is by itself a subsidiary of M/s. Hotz Industries Ltd., since June 1999, which is not a subsidiary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o PB-22, which is balance sheet of the assesseecompany to show that assessee-company has interest free funds/capital to the tune of Rs. 16,92,96,307/-, out of which, unsecured loans [interest free] are in a sum of Rs. 11,61,52,631/- [PB-25]. He has, therefore, submitted that assessee-company has sufficient interest free funds available which were more than the amount advanced to the subsidiary company. PB-27 is details of loan and advances given to the subsidiary company in a sum of Rs. 3,29,00,000/-. He has, therefore, submitted that presumption could be in favour of the assessee that assessee has given the aforesaid loan to the subsidiary company, out of interest free capital and reserves available to the assessee. He has submitted that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nterest-free and overdraft and/or loans taken, then a presumption would arise that investments would be out of the interestfree funds generated or available with the company, if the interest-free funds were sufficient to meet the investments. In this case this presumption was established considering the finding of fact both by the Commissioner (Appeals) and the Tribunal. The interest was deductible. 6.1. The Hon'ble Supreme Court in the case of CIT vs Reliance Industries Limited (2019) 410 ITR 446 (SC) has held as under : "Business expenditure - Interest on borrowed capital - Finding of Tribunal that interest-free funds available with assessee sufficient to meet investment - Presumption that investments in subsidiaries were out of intere ..... X X X X Extracts X X X X X X X X Extracts X X X X
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