TMI Blog2018 (8) TMI 2116X X X X Extracts X X X X X X X X Extracts X X X X ..... on record any specific instance of interest bearing borrowed funds being diverted to the related parties free of interest, thus no disallowance u/s 36(1)(iii) is called for. As in the case of CIT vs. Reliance Utilities and Power Ltd. [ 2009 (1) TMI 4 - BOMBAY HIGH COURT] has held 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 the interest free funds generated or available with the assessee company, if the interest free funds were sufficient to meet the investment. Appeal filed by the assessee is allowed. - ITA No. 1207/Del/2018 - - - Dated:- 29-8-2018 - Shri R. K. Panda, Accountant Member For the Assessee : Shri Gautam Jain, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and advances taken and given. However, according to the Assessing Officer, the assessee failed to furnish any confirmation and reason for not charging interest on loans and advances. He referred to various decisions where it has been held that the assessee, which advances its funds as interest free loans, has no justification to claim interest on borrowings. Since the assessee in the instant case has advanced money for purposes unrelated to business activities of the assessee and the assessee was paying interest on loan and on the other hand has diverted its money to others free of interest, therefore, the Assessing Officer made addition of Rs.5,39,028/- by reducing the interest received of Rs.2,30,068/- from the interest paid at Rs.7,69,09 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re, the disallowance is not justified. The ld. counsel, for the assessee referring to various decisions submitted that when the assessees owned funds are more than the interest free advances then no disallowance is called for. For the above proposition, he relied on the following decisions :- (i) CIT vs. Bharti Televenture Ltd., 331 ITR 502 (Del). (ii) Virender Kumar Gupta vs. ITO, ITA No. 6293/D/2016 for A.Y. 2013-14. (iii) Vijay Pal Garg vs. DCIT, ITA No. 1774/D/2014 for A.Y. 2011-12. (iv) DCIT vs. Navbharat Press, ITA No. 160/RPR/2014 for A.Y. 2010-11. (v) Venus Auto vs. CIT, 396 ITR 477 (All). He accordingly submitted that the order of the ld. CIT(A) be set-aside and the disallowance be deleted. 7. The ld. DR on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the case of CIT vs. Reliance Utilities and Power Ltd. reported in 313 ITR 340 has held 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 the interest free funds generated or available with the assessee company, if the interest free funds were sufficient to meet the investment. Various other decisions relied on by the ld. counsel for the assessee in the synopsis and Paper Book also support its case that where the assessee is having sufficient owned funds which is more than the interest free funds given or advanced to related parties and the assessee is maintaining a common bank account and the Revenue has not proved with any evidence that a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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