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TMI Blog2019 (4) TMI 1784X X X X Extracts X X X X X X X X Extracts X X X X ..... d in the circumstances of the case and in law, the Ld.CIT(A) erred in granting relief of Rs. 89,71,506/- to the assessee by ignoring the fact that the direct nexus between the surplus fund being given to subsidiary company is not established and that the subsidiary company has applied such loan for business purpose only?". b) Whether on the facts and in the circumstances of the case and in law, the Ld.CIT(A) erred in granting relief of Rs. 25,94,362/- to the assessee by ignoring the fact that the assessee failed to provide the nexus between the surplus fund and its use. c) "The appellant prays that the order of the CIT(A) on the above grounds be set aside and that of the A.O. be restored". d) The appellant craves leave to amend or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT v. Reliance Utilities and Power Ltd. [313 ITR 340]. 6. Before us Ld. Counsel for the assessee reiterated the submissions made before the lower authorities. 7. Ld. DR vehemently supported the orders of the Assessing Officer. 8. We have heard the rival submissions, perused the orders of the authorities below. It is not in dispute that the assessee has sufficient interest free funds for making investments or for advancing loans to sister concerns. This is very much evident from the submissions of the assessee which is extracted by the Ld.CIT(A) in his order at Page No. 9 Para 2.3:- "2.3. The appellant on 22-03-2017 filed a further written, submission, the contents of which are reproduced below: 1. In regard to proportionate di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee sufficient to meet its investments and at the same time the assessee had raised a loan it can be presumed that the investments were from interest free funds available. ... The Principle therefore would be that if there are funds available both interest free and overdraft and/or loans taken, then a presumption would arise that investments would be out of interest free funds generated or available with the company, if the interest free funds were sufficient to meet the investment." 9. This fact is not disputed by the Revenue. In view of the of the decision of the Hon'ble Jurisdictional High Court in the case of CIT v. Reliance Utilities and Power Ltd. (supra), wherein it has been held that, if assessee has sufficient interest free ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her the expenditure claimed is legitimate or not. Thus, no disallowance of interest paid to supplier can be made u/s. 36(l)(iii) on the ground that no interest is charged on the debtors. 3. In view of the aforesaid discussion and judicial pronouncements, the advances made by the appellant company to its subsidiary for the for the purpose of the business is a measure of commercial expediency. Further the appellant has lent money out of own funds and, hence the disallowance made u/s, 36(l)(iii) of the Act should be deleted, 4. In this regard, we wish to place reliance on the decision of Hon'ble Mumbai ITAT in the case of DCIT v. Kamdar Constructions (ITA No. 965/Mum/2009) (enclosed at page no 15 to 21 of the PB) wherein the Hon' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reserves. I have carefully considered the rival submission and find that the disallowance made by the AO deserves to be deleted on the facts as well as on the case laws relied upon by the Appellant. This ground of appeal succeeds."
13. On a careful consideration of the submissions of the assessee as well as the findings of the Ld.CIT(A), we do not see any valid reason to interfere with the decision of the Ld.CIT(A), as the issue is squarely covered by the decision of the Coordinate Bench in the case of DCIT v. Kamdar Constructions (supra). Thus, this ground of the Revenue is rejected.
14. In the result, appeal of the Revenue is dismissed.
Order pronounced in the open court on the 05th April, 2019. X X X X Extracts X X X X X X X X Extracts X X X X
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