TMI Blog2016 (12) TMI 1833X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee. On this issue, we find guidance from the judgement of Hon ble Bombay High Court in the case of CIT vs. Reliance Utilities and Power Ltd. [ 2009 (1) TMI 4 - BOMBAY HIGH COURT ] - In view of the huge funds available with the assessee without any interest liability - Thus, the disallowance of interest towards interest-free advance is uncalled for - Decided in favour of assessee. - I.T.A. No. 1563/Ahd/2013 - - - Dated:- 16-12-2016 - SHRI S.S. GODARA, JUDICIAL MEMBER And SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER For the Appellant : Shri Parin Shah, AR For the Respondent : Shri K. Madhusudan, Sr.DR ORDER PER PRADIP KUMAR KEDIA, AM: This appeal by the Assessee is directed against the order of the Commi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. The AO found that the assessee had advanced certain funds noted above without any interest while it incurred liability to pay interest and therefore the advances made as aforesaid were for non-business purposes. He accordingly observed that interest @ 15% p.a. on advances given to various parties on which no interest has been charged which works out to ₹ 3,16,599/- requires to be disallowed. He accordingly enhanced the returned income of the assessee to this extent. 5. The CIT(A) in first appeal endorsed the action of AO in making disallowance by restoring to section 36(1)(iii)of the Income Tax Act, 1961 (hereinafter referred to as the Act ). However, the assessee remained aggrieved by the disallowance amount to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded was in the personal benefit of the Director without any traces of commercial expediency in such advance. He accordingly submitted that the reasons cited by the CIT(A) in sustaining the disallowance does not call for any interference. 8. We have carefully heard the rival submissions and perused the orders of authorities below. At the outset, we note that the interest-free own funds available at the disposal of the assessee stands at ₹ 352.91 lakhs as on 31/03/2008 and ₹ 507.94 lakhs as on 31/03/2009. The corresponding interest-free advance as on 31/03/2009 stands at ₹ 21.10 lakhs. In such a situation, where interest-free own funds available to the assessee are far in excess of the interest-free advance, the presumpti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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