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2016 (4) TMI 162 - ITAT DELHIDisallowance of interest under sec. 36(1)(iii) - Held that:- The assessee was having sufficient non-interest bearing funds being shareholder fund (Rs.3,65,72,082 as on 01.04.2010 and ₹ 7,72,68,670 as on 31.3.2011) and since the immediate source of the loan to the director was sale proceeds of the industrial plot, in our view, there was no nexus between the borrowings of the assessee and advances made to the director out of the interest bearing borrowed funds. It is also undisputed fact that all the borrowings were sanctioned in earlier years and the total secured loan outstanding at the end of the year, has been reduced to ₹ 2,75,17,405 as on 31.3.2011 from ₹ 5,09,08,700 as on 01.04.2010, during the year, clearly establishes that all the borrowings for which interest/financial charges has been paid, were for the business purpose only. In view of the above material facts and respectfully following the ratios laid down by the Hon'ble jurisdictional High Court of Delhi in the above cited decision in the case of CIT vs. Bharti Tele-venture Ltd.( 2011 (1) TMI 326 - DELHI HIGH COURT ), we hold that the authorities below were not justified in making and upholding the disallowance of interest invoking the provisions of sec. 36(1)(iii) of the Act - Decided in favour of assessee
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