Assessee, engaged in real estate business, Assessing Officer disallowed a part of interest on amount borrowed.  The assessee raised a plea that since it had surplus interest free funds available in form of capital contribution of partners for making investment in non-business purposes, impugned disallowance was to be deleted. Tribunal held that the assessee paid interest on capital contributed by partners, it no more remained interest free fund, notwithstanding definition of interest under section 2(28A) read in juxtaposition to section 40 (b). Therefore the assessee did not have interest free funds available at its disposal which could have been used for making investment for non-business purpose. Accordingly  disallowance of interest made by the AO is affirmed.  (AY. 2011-12)