Court Reviews Interest Disallowance u/s 36(1)(iii) for Assessee Using Own Funds for Interest-Free Loans to Sister Concerns.

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....Disallowance of proportionate interest u/s 36 (1) (iii) - when assessee had sufficient funds, why should it depend on borrowed funds. In any case, if at a given point of time assessee has own funds and they have advanced it as interest-free loans to sister concerns for meeting their business needs, in which assessee also has an interest, then such advances should not lead to disallowance of interest paid on borrowings. In other words, unless the assesses establishes with cash flow statements about availability of its own funds at the time of making the interest-free advances. - Matter restored back for verification - AT....