Held that the assessee’s financial statements showed that the interest-free funds available with the assessee in the shape of share capital and reserves and surplus far exceeded the short-term loans and advances made by the assessee. The assessee used mixed funds. In such a case, a presumption would arise in the assessee’s favour that the advances were made out of interest-free funds available with the assessee and the onus would be on the Assessing Officer to justify the disallowance. No such exercise having been carried out by the Assessing Officer, it was to be presumed that the funds were advanced first out of interest-free funds available with the assessee. Relied on CIT (LTU) v. Reliance Industries Ltd (2019) 410 ITR 466 (SC), S. A. Builders ltd. v. CIT (APPEALS)(2007) 288 ITR 1 (SC).(AY.2013-14, 2014-15)
Dy. CIT v. Agni Estates And Foundations P. Ltd. (2023)107 ITR 91 ((SN.)(2024) 204 ITD 249 (Chennai)(Trib)
S. 36(1)(iii) : Interest on borrowed capital-Advances to sister concerns-Interest-free funds available with assessee Presumption that advances were out of interest-free funds-Commercial expediency-Disallowance is not justified.