https://www.taxtmi.com/caselaws?id=467716 Where an assessee has sufficient interest-free own funds to cover advances to sister concerns, a disallowance of interest under section 36(1)(iii) cannot be sustained unless the revenue shows direct diversion of interest-bearing borrowings for non-business use. The Tribunal noted that the assessee's own funds exceeded the advances, the revenue failed to prove any such diversion, and the computation of finance cost proceeded on an incorrect assumption that borrowed funds financed the advances. Applying the settled presumption that advances are drawn from interest-free funds when those funds are adequate, the disallowance was deleted and the revenue's challenge failed. en-us Wed, 06 Apr 2022 00:00:00 +0530 Tue, 31 Mar 2026 10:12:17 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=467716 Where an assessee has sufficient interest-free own funds to cover advances to sister concerns, a disallowance of interest under section 36(1)(iii) cannot be sustained unless the revenue shows direct diversion of interest-bearing borrowings for non-business use. The Tribunal noted that the assessee's own funds exceeded the advances, the revenue failed to prove any such diversion, and the computation of finance cost proceeded on an incorrect assumption that borrowed funds financed the advances. Applying the settled presumption that advances are drawn from interest-free funds when those funds are adequate, the disallowance was deleted and the revenue's challenge failed. Case-Laws Income Tax Wed, 06 Apr 2022 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=467716