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TMI Blog2022 (8) TMI 944X X X X Extracts X X X X X X X X Extracts X X X X ..... [ 2020 (12) TMI 117 - ITAT BANGALORE] held that since the interest free funds available with the assessee is more than the interest free loans given to subsidiaries, it should have to be presumed that the loans have been given out of interest free funds. As in the case of CIT vs. HDFC Bank Ltd [ 2014 (8) TMI 119 - BOMBAY HIGH COURT] held that if the own funds and interest free funds available with the assessee is more than the investment in tax free securities, then it should be presumed that the said investments have been made out of interest free funds available with the assessee. In view of the consistent position taken by the Gujarat High Court and other Courts/ Tribunals discussed above, as applied to the facts of the instant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e that the order of the Hon ble Tribunal in assessee s own case for earlier years relied upon by the Commissioner (Appeals) were different than that of in the year under consideration. 4. The appellant craves leave to add, amend, alter and withdraw any ground of appeal anytime up to the hearing of this appeal. Total tax effect Rs. 4,33,670/- 3. The brief facts of the case are that the assessee is a private limited company engaged in the manufacture of diesel oil engines, mono block pump sets, mini tractors etc. During the year, the assessee company had advanced interest free loans amounting to Rs. 4,59,25,000/- to M/s Chandrakant and Co. The AO also observed that the outflow on account of interest income was Rs. 59.10 lak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO thereby not establishing the business expediency of such advance. The pleas of the assessee that the advance was made out of interest free surplus funds and that interest free advances are normal as compared to such funds has been very cogently rebutted by the AO by bringing but that the surplus funds and capital of the assessee are locked up in fixed assets and other non-liquid assets. AS against share capital and Reserves and surplus of Rs.33.48 crores, the assessee's non liquid assets/investments amounted to Rs. 19.03 crores. Therefore, the claim of the assessee that interest free advances were out of interest free surplus funds and capital is not tenable. It is also noteworthy that neither during the assessment nor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that no interest free funds were left to be available for giving interest free advances by the assessee. However, the fact situation in the present assessment year under consideration i.e. assessment year 2014-15 is different since the assessee is having capital of Rs. 30 crores approximately, whereas it has made interest free advances only to the tune of Rs. 4.90 crores. Therefore, the counsel for the assessee submitted that for assessment year 2012-13, the ITAT sustained the additions on the basis of peculiar facts available during that year, which fact situation does not apply to the instant assessment year. In the instant assessment year, the spare interest free surplus is much in excess of interestfree advances and hence no part of int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... axmann.com 540 (Gujarat), the Gujarat High Court held that where assessee's interest free funds exceeded investment made for earning exempted dividend income, disallowance under section 14A was not justified. Again, in the case of UTI Bank Ltd[2018] 99 taxmann.com 392 (Gujarat), the Gujarat High Court held that no disallowance could be made where assessee's interest-free funds far exceeded its interest-free investments. In the case of Gujarat Narmada Valley Fertilizers Co. Ltd [2014] 42 taxmann.com 270 (Gujarat), the Gujarat High Court held that where assessee-company received dividend on UTI and shares and investment in same was made in earlier years and interest free funds available with assessee were much larger as compared to in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there are funds available, both, interest-free and overdraft and/or loans taken, then a presumption would arise that investments would be out of interest-free funds generated or available with company, provided said funds are sufficient to meet investments. Again ITAT in the case of Assetz Infrastructure in ITA Number 563/ Bang/ 2019, held that since the interest free funds available with the assessee is more than the interest free loans given to subsidiaries, it should have to be presumed that the loans have been given out of interest free funds. Hon ble Bombay High Court in the case of CIT vs. HDFC Bank Ltd (2014)(49 taxmann.com 335)(Bom) held that if the own funds and interest free funds available with the assessee is more than the in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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