2012 (7) TMI 723

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....to be set aside.   2. The Ld. CIT(A) has erred on facts and in law in deleting addition of Rs. 34,29,023/- made on account of disallowance of interest on borrowed funds utilized in giving interest free advances and making investment in subsidiary company ignoring that: a) The onus was on the assessee to prove that the interest claimed on borrowed funds were business expenses incurred wholly and exclusively for the purpose of business of the assessee.   b) The assessee failed top bring any material on record during the course of assessment proceedings to show that the diversion of funds served the purpose of the business expediency of the assessee company for the purpose of allowability of interest as per the proposition l....

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.... interest bearing funds. Relevant details about the funds flow available with the assessee were duly filed before AOA and ld. CIT(Appeals) to the effect that assessee had interest free funds of Rs. 1093.75 crores to its credit. This being so, the amount utilized by the assessee for the acquisition of equity shares of the subsidiaries being out of interest free funds, ld. CIT(Appeals) rightly deleted the addition by following observations: "3. I have gone through the contention of the appellant and find merit in its case. On perusal of the order the AO has disallowed interest paid on the ground that interest free loans have been advanced to or investments made in a group company M/s Bharti Televentures Ltd. (BTVL). The appellant compan....

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....ained the issuance of equity shares and availability of interest free funds as under:   Equity issued Source 31-05-01 Rs. 28.63 crores This has been issued out the opening balance of Rs. 47.44 crores which explained was part of Rs. 57.64 crores received on 31-3-01 as explained in para 4.1. This Rs. 57.64 crores was not part of interest bearing funds. 16-08-01 Rs. 350.00 crores This was issued against Rs. 353.57 crores given to BTVL on 13-8-01. The source of this equity investment was Rs. 353.57 crores (USD 75 M) received from Singapore Telecom Limited through postal on 13-8-01. Refer Deutsche Bank account at PB page 121. Therefore this was not out of interest bearing funds. 30-09-01 Rs. 312 crores Th....