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2019 (2) TMI 1704 - ITAT MUMBAIDisallowing interest u/s 36(1)(iii) - HELD THAT:- On records including the details of own funds and details of advances. We find that the CIT(A) has recorded findings of facts that loans and advances to directors were ₹ 1,32,29,609/-, advances for business purposes were ₹ 33,55,861/- such as advances to suppliers, for factory plot and advances to staff and the remaining amount of advances represented the advances to various govt. authorities. CIT(A) has recorded a finding of facts to this effect and sustained the additions on ₹ 1,22,92,377/- @14% by excluding out the advances to directors of ₹ 1,32,29,609/- advance given to Reliable Infra Ltd ₹ 9,37232/-for business purpose. CIT(A) has accepted the contentions of the assessee that the interest free advances on which disallowance of interest is to be made are to the tune of ₹ 1,22,,92,377/-. We find merit in the arguments of assessee that own funds were ₹ 1,58,40,305/- as the balance Sheet whereas the interest free advances are only ₹ 1,22,92,377/- and therefore presumption is that no disallowance u/s 36(1)(iii) of the Act can be made as the interest free funds were more than the amount of advances given free of interest which is supported by the decision of the Hon’ble Bombay High Court in the case of CIT Vs Reliance Utilities and Power Ltd [2009 (1) TMI 4 - BOMBAY HIGH COURT]. We therefore following the ratio laid down by the Jurisdictional High Court , set aside the order of CIT(A) and direct the AO to delete the addition as made u/s 36(1)(iii) - Appeal of the assessee is allowed.
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