Allowing the appeal of the assessee the Tribunal held that that the interest-free advances received from customers were available with the assessee to the tune of Rs. 16.96 crores. The interest-free loans given to subsidiary companies were at Rs. 10.26 crores. Since the interest-free funds available with the assessee were more than the interest-free loans given to subsidiaries, it should be presumed that the loans had been given out of the interest-free funds. Accordingly, the Assessing Officer was to delete this disallowance. Followed, CIT v. Brindavan Beverages (P) L td (2017) 393 ITR 261 (Karn.)(HC). (AY.2014-15)
Assetz Infrastructure Pvt. Ltd. v. Dy.CIT (2020) 84 ITR 59 (SN) (Bang.)(Trib.)
S. 36(1)(iii) : Interest on borrowed capital-Interest-free advances received from customers were available-Interest-free loans given to subsidiaries-Proportionate disallowance of interest not warranted.