Interest Disallowance Under Section 36(1)(iii) Rejected As No Proof Of Fund Diversion For Non-Business Purpose

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....ITAT ruled in favor of assessee regarding interest disallowance under Section 36(1)(iii). AO's contention of interest-free advances from interest-bearing funds was rejected as AO failed to establish diversion of funds for non-business purposes. Tribunal found substantial interest-free funds available with assessee from sister concerns, exceeding the disputed amount. Regarding stock valuation, ITAT upheld CIT(A)'s partial deletion of addition, maintaining Rs. 50,63,472 for consistency in FIFO method while deleting Rs. 3,95,62,067. On handling/spillage/wastage losses, ITAT accepted natural losses due to environmental factors and handling, noting no adverse findings during search proceedings or in previous assessments. AO's arbitrary disallowance was set aside as reasonable business losses were established.....