Following its own decision in the assessee’s case for the preceding assessment year on identical questions of law, the High Court dismissed the revenue’s appeal. It was held that where an assessee possesses both interest-free and interest-bearing funds, a presumption arises that investments are made from the available interest-free funds. As the assessee’s own interest-free funds were far in excess of its investments and interest-free advances, no disallowance of interest was warranted under either section 14A or section 36(1)(iii). (AY. 2011-12)