2021 (7) TMI 975

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....e disallowance on interest expenditure of Rs. 54,32,211/- made by the A.O. 2. The facts relating to the issue are stated in brief. During the course of assessment proceedings, the A.O. noticed that the assessee has made investment of Rs. 2.71 cores in a company named M/s. ComAvia System Technologies Pvt. Ltd. He also noticed that the assessee has also given interest free loan of Rs. 3 crores to others. (During the course of hearing before us, the Ld A.R submitted that the above said amount of Rs. 3.00 crores was also given to M/s ComAvia System Technologies P Ltd). The AO noticed that the assessee has not charged any interest on the loans given. The A.O. noticed that the assessee was claiming interest expenditure of Rs. 54,32,211/-. The ....

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....f value of investment and loan given interest free. 4. The Ld. A.R. invited our attention to the decision rendered by Hon'ble Karnataka High Court in the case of CIT Vs. Brindavan Beverages Pvt. Ltd. (2017) 393 ITR 261, wherein the Hon'ble jurisdictional High Court held that Tribunal was justified in deleting the interest disallowance when the assessee had sufficient own funds covering loans and advances made to its directors and sister concerns. The Ld. A.R. submitted that an identical issue was examined by the Hon'ble Bombay High Court in the case of CIT Vs. Reliance Industries Ltd (2017) 86 Taxmann.com 24, wherein the Bombay High Court has expressed the following view: "30. We have carefully perused this paragraph and the rea....

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....the company. Then, the borrowed capital in hand in that case and interest expenditure was deductible under Section 36(1)(iii) of the I.T. Act, 1961. The Tribunal held that the interest free fund available to the assessee is sufficient to meet its investment. It can be presumed that investments were made from interest free funds available with the assessee. This position clearly emerges from the record and for the current assessment year as well. We do not see how a different view in the facts and circumstances can be taken. If the Tribunal had followed the earlier view and on facts, then, there is no perversity when nothing contrary to the factual material was brought on record by the Revenue. In such circumstances, the concurrent view on d....