https://www.taxtmi.com/caselaws?id=760105 ITAT Delhi held that disallowance of interest on interest-free loans was unjustified where the assessee had substantial surplus funds alongside borrowed funds. Following Reliance Utilities precedent, when both owned and borrowed funds exist, diversion for non-business purposes is presumed from own funds. However, regarding bogus share capital issue, ITAT upheld disallowance for eight parties' investments. Despite proper documentation and banking channels, investors failed to prove capacity as they showed meager income with identical doubtful sources - application money for securities allotment. ITAT found identity proven but capacity unestablished, dismissing these grounds while allowing conditional benefit for additional documentation. en-us Fri, 11 Oct 2024 00:00:00 +0530 Tue, 15 Oct 2024 16:01:00 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=760105 ITAT Delhi held that disallowance of interest on interest-free loans was unjustified where the assessee had substantial surplus funds alongside borrowed funds. Following Reliance Utilities precedent, when both owned and borrowed funds exist, diversion for non-business purposes is presumed from own funds. However, regarding bogus share capital issue, ITAT upheld disallowance for eight parties' investments. Despite proper documentation and banking channels, investors failed to prove capacity as they showed meager income with identical doubtful sources - application money for securities allotment. ITAT found identity proven but capacity unestablished, dismissing these grounds while allowing conditional benefit for additional documentation. Case-Laws Income Tax Fri, 11 Oct 2024 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=760105