TaxTMI 
TaxTMI 
2019 (4) TMI 1784
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....its appeal: - a) "Whether on the facts and in the circumstances of the case and in law, the Ld.CIT(A) erred in granting relief of Rs. 89,71,506/- to the assessee by ignoring the fact that the direct nexus between the surplus fund being given to subsidiary company is not established and that the subsidiary company has applied such loan for business purpose only?". b) Whether on the facts and in the circumstances of the case and in law, the Ld.CIT(A) erred in granting relief of Rs. 25,94,362/- to the assessee by ignoring the fact that the assessee failed to provide the nexus between the surplus fund and its use. c) "The appellant prays that the order of the CIT(A) on the above grounds be set aside and that of the A.....
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....he decision of the Hon'ble Jurisdictional High Court in the case of CIT v. Reliance Utilities and Power Ltd. [313 ITR 340]. 6. Before us Ld. Counsel for the assessee reiterated the submissions made before the lower authorities. 7. Ld. DR vehemently supported the orders of the Assessing Officer. 8. We have heard the rival submissions, perused the orders of the authorities below. It is not in dispute that the assessee has sufficient interest free funds for making investments or for advancing loans to sister concerns. This is very much evident from the submissions of the assessee which is extracted by the Ld.CIT(A) in his order at Page No. 9 Para 2.3:- "2.3. The appellant on 22-03-2017 filed a further written, submission,....
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....se. In the said case, the Hon'ble Bombay High Court has held as follows: "... If there be interest free funds available to an assessee sufficient to meet its investments and at the same time the assessee had raised a loan it can be presumed that the investments were from interest free funds available. ... The Principle therefore would be that if there are funds available both interest free and overdraft and/or loans taken, then a presumption would arise that investments would be out of interest free funds generated or available with the company, if the interest free funds were sufficient to meet the investment." 9. This fact is not disputed by the Revenue. In view of the of the decision of the Hon'ble Jurisdictiona....
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.... debtors or not Various courts have held that the Id. Assessing Officer cannot decide whether a particular expenditure should be incurred or not but has to determine whether the expenditure claimed is legitimate or not. Thus, no disallowance of interest paid to supplier can be made u/s. 36(l)(iii) on the ground that no interest is charged on the debtors. 3. In view of the aforesaid discussion and judicial pronouncements, the advances made by the appellant company to its subsidiary for the for the purpose of the business is a measure of commercial expediency. Further the appellant has lent money out of own funds and, hence the disallowance made u/s, 36(l)(iii) of the Act should be deleted, 4. In this regard, we wish to plac....