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TMI Blog2018 (5) TMI 2093X X X X Extracts X X X X X X X X Extracts X X X X ..... f the case by not deleting the disallowance made by the Assessing Officer, but instead restricting it at Rs. 26,05,650 i.e. (1/3rd of 3908475). The Worthy CIT(A)-4, Ludhiana, has further erred by upholding and treating the balance expenditure as non-business expenditure, and further alleging that after demerger, no business activity has been taken up except financial activities for which the expenses were claimed by the assessee. Directions be given to the Assessing Officer to allow the whole expenditure incurred by the Appellant, during the year in its normal course of Investment activity, done by the company as adopted after demerger scheme. b) That the Worthy CIT(A)-4, Ludhiana, has further, erred by not directed the Assessing Office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed term loan on which the assessee had paid interest @ 11% to the bank. However, the assessee during the year had also given loan / advance to its sister concern and charged interest @ 8%. The Assessing officer disallowed the difference in the interest paid and interest charged u/s 36(i)(iii) of the Act. 5. In appeal, the Ld. CIT(A) worked out the debt equity ratio at 27:73 and observed that from the above ratio the assessee company had paid 27% of the total loan out of borrowed funds. he, therefore, restricted the disallowance to 27% of the total disallowance made by the Assessing officer at Rs. 3,66,531/- which came out at Rs. 98,963/- and restricted the disallowance to that extent. 6. Before us, Ld. Counsel for the assessee has submitt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt in the case of 'CIT Vs. Reliance Utilities and Power Ltd.' (supra), wherein the Hon'ble Courts have held that where the own funds of the assessee were sufficient to meet the interest free advances given during the year, then the presumption would arise that such advances or investments had been made out of the own funds of the assessee. Hence, respectfully following the aforesaid decisions, and in view of the facts and circumstances of the case, we do not find any justification on the part of the lower authorities in making the disallowance on this issue. The disallowance made on this issue, therefore, is ordered to the deleted. 8. In the result, the appeal of the assessee is treated as partly allowed. Order pronounced in the Open ..... X X X X Extracts X X X X X X X X Extracts X X X X
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