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TMI Blog2015 (11) TMI 399X X X X Extracts X X X X X X X X Extracts X X X X ..... earning of the tax-free income received by the assessee on tax-free bonds. The Tribunal held that the Commissioner of Income-tax (Appeals) rightly interfered with the order of the Assessing Officer. The decision of the Commissioner of Income-tax (Appeals) was upheld by the Tribunal and the view taken by the Commissioner of Income-tax (Appeals) as also the Tribunal is inconsonance with the law laid down by this court in the case of CIT v. Reliance Utilities and Power Ltd. [2009 (1) TMI 4 - HIGH COURT BOMBAY ]. The view taken also has been in consonance with the law laid down by this court in the case of Godrej and Boyce Mfg. Co. Ltd. v. Deputy CIT reported in [2010 (8) TMI 77 - BOMBAY HIGH COURT ] 328 ITR 81 (Bom). In these circumstances, we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ree bonds was made only out of its own funds. The Assessing Officer applied an estimation and proceeds to hold that since the borrowed funds of the assessee at the relevant time were 69.9 per cent. of the total funds, the utilisation of the borrowed funds for making tax-free bonds of ₹ 10.50 crores at ₹ 716.58 lakhs and the interest attributable to the said borrowed funds would have to be taken into account. The average rate of interest was applied by the Assessing Officer and which he proceeded to disallow in the assessment completed by him. 3. The Commissioner of Income-tax (Appeals) and the Tribunal both held that there was no warrant for such an estimation. The Commissioner of Income-tax (Appeals) held that no interest expe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er. Therefore, the Additional Solicitor General pointed out that reference is made only to the reserves and there is no mention of interest-free funds. It was urged that the reserves shown on the liabilities side of the balance- sheet and are represented by a variety of assets on the assets side. These assets can be fixed or non-liquid assets and, hence, incapable of any investment. Therefore, the inquiry as to whether the interest-free funds were available on the assets side and in the absence of sufficient proof of such availability, the presumption could not be raised. That was the inquiry which was warranted and that is why the matter came to be remitted and restore to the file of the Assessing Officer. That was to find out whether the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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