TMI Blog2019 (4) TMI 963X X X X Extracts X X X X X X X X Extracts X X X X ..... ompany, would be out of the interest free funds generated as are available with the assessee-company. When interest free funds were sufficient to meet the Investments above, no disallowance could be made against the assessee. We are of the view that addition is wholly unjustified. We, accordingly, set aside the orders of the authorities below and delete the addition. - Decided in favour of assessee. - ITA.No.2942/Del./2016 - - - Dated:- 15-4-2019 - Shri Bhavnesh Saini, Judicial Member And Shri Prashant Maharishi, Accountant Member For the Assessee : Shri Jaspal Singh, Advocate. For the Revenue : Smt. Naina Soin Kapil, Sr.D.R. ORDER PER BHAVNESH SAINI, J.M. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company to M/s. TRR Properties Limited, the said company would allow the user of this property without any rent. Thus, on this arrangement, assessee-company raised a loan from Catholic Syrian Bank and advanced the same to the landlord namely TRR Properties Limited. The assessee-company in this way saved a rent of ₹ 54 lakhs and gained ₹ 34,09,780/- [Rs.54 lakhs (-) ₹ 19,90,220/-]. It was further submitted that assessee is a holding company of TRR Properties Limited till 31st March, 2010, a rent of ₹ 4,50,000/- per month was being paid to the landlords i.e., TRR Properties Limited. The assessee-company purchased all the shares of the landlord company and as such the landlord TRR Properties Limited becsme a 100% subsi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of the property and other misc payments of business, totaling to ₹ 3,29,99,977/-. 3.1. The Ld. CIT(A) noted the above contention of the assessee-company that in this way the assessee-company saved the amount of the rent. The Ld. CIT(A) did not accept the contention of the assessee-company. The Ld. CIT(A) noted that loan raised by the assessee-company has in effect been utilised by the subsidiary company of the assessee to repay the outstanding loan of the holding company of the assessee-company [M/s. Hotz Industries Ltd.,] The Ld. CIT(A) also considered the Leave and License Agreement between assessee-company and TRR Properties Ltd., He has noticed that the said agreement is actually between TRR Properties Ltd., and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Power Ltd., (2009) 313 ITR 340 (Bom.), deleted the similar addition on the above reasons. 5. On the other hand, the Ld. D.R. relied upon the Orders of the authorities below. 6. We have considered the rival submissions and perused the material on record. The Hon ble Bombay High Court in the case of CIT vs., Reliance Utilities Power Ltd., (2009) 313 ITR 340 (Bom.) held as under : The assessee claimed deduction of interest on borrowed capital. The Assessing Officer recorded a finding that the sum of ₹ 213 crores was invested out of its own funds and ₹ 147 crores was invested out of borrowd funds. Accordingly he disallowed interest amounting to ₹ 4.40 crores calculated at 12 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sheet of the assessee-company which shows that assessee-company has share capital and unsecured loans to the tune of ₹ 16.92 crores. The assessee has interest free unsecured loans in a sum of ₹ 11,61,52,631/-. Thus, assessee has sufficient interest free funds available, then presumption would arise that loan given by the assesseecompany to the subsidiary company, would be out of the interest free funds generated as are available with the assessee-company. When interest free funds were sufficient to meet the Investments above, no disallowance could be made against the assessee. In view of the above and following the decisions referred to above, we are of the view that addition is wholly unjustified. We, accordingly, set aside th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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