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TMI Blog2016 (4) TMI 808X X X X Extracts X X X X X X X X Extracts X X X X ..... n, the assessee was having sufficient interest free funds of its own and apart from substantial share holder funds, it is presumed that investment in sister concern were made by the assessee out of interest free funds, thus, no part of interest on borrowings can be disallowed on the basis that investment were made out of interest bearing funds, supports the case of the assessee. Disallowance of interest made u/s 36(1)(iii) deleted - Decided in favour of assessee - ITA NO.7403/MUM/2012 - - - Dated:- 21-3-2016 - Shri Joginder Singh, Judicial Member and Shri Rajendra, Accountant Member For The Assessee by Shri K.A. Vaidyalingam For The Revenue : Shri M. Murli-DR ORDER Per Joginder Singh (Judicial Member) The assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t was observed by the Assessing Officer that the assessee paid interest on business advanced obtained from banks to the tune of ₹ 19,48,21,282/- on the total loans as on close of balance sheet, it was ₹ 620.99 crores and the reserve and capital was only ₹ 124.53 crores. The assessee company gave advance for purchase of business premises in Bharat Diamond Boars and other immovable properties including Amby Valley Projects, Gujarat Hira Boars, Everest Electricals, Suzlon Energy and Vestas RRB Indi, etc. The average balance, during the year was computed at ₹ 6,08,05,929/-. Since, there were advances for fixed assets and they were not put to use, therefore, proportionate disallowance of interest was proposed. It was furt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aring funds, supports the case of the assessee. Likewise, Hon ble High Court in CIT vs HDFC Bank Ltd. (366 ITR 505) (Bom.), took identical view. It is noteworthy that while coming to a particular conclusion, the Hon ble jurisdictional High Court, duly considered the decision in Reliance Utilities and Power Ltd. (supra) along with the case of American Express International Banking Corporation vs CIT (2002) 258 ITR 601, CIT vs M/s Lord Krishna Bank Ltd. (now merge with HDFC Bank Ltd.) order dated 04/07/2014 (ITA No.1079 of 2012). Identically, the Hon ble High Court in HDFC Bank Ltd. vs DCIT (W.P. No.1753 of 2016) order dated 25/02/2016 in para 11 (a) observed as under:- One more aspect which needs to be adverted to and that is a decision w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etitioner s stock in trade. Consequently, there would be no occasion to invoke Section 14A as held by this Court in India Advantage Securities Ltd. wherein the Revenue s appeal from the order of the Tribunal was dismissed, to contend that no disallowance can be under Section 14A in respect of exempted Income arising from stock in trade. One more fact which must be emphasized is that merely because a decision has been cited before the Court and a reference to that has been made in the order of the Court such as in the case of Godrej and Boyce Manufacturing Co. Ltd. reference was made to CIT Vs. Reliance Utilities and Power Ltd. 313 ITR 340 by itself would not lead to the conclusion that Reliance Utilities and Power Ltd. been considered an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eeded on a fundamentally erroneous basis. In the present appeal, the accounts were mixed and the disallowance was made by the ld. Assessing Officer on the plea that the assessee could not prove that only surplus funds were given for acquisition of fixed asset. However, the claim of the assessee is that the own networth of the assessee is 124.54 crores and unsecured interest free loans from the promoter was ₹ 74.78 crores and even the current year net profit is much more than the investment in capital asset. In such a situation, respectfully following the aforesaid decisions, from Hon ble High Court, the appeal of the assessee is allowed. Finally, the appeal of the assessee is allowed. This order was pronounced in the open in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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