TaxTMI 
TaxTMI 
2026 (7) TMI 1081
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....), ITBA/NFAC/S/250/2024-25/1064867864(1) dated 14.05.2024, and ITBA/NFAC/S/250/2024-25/1064935672(1) dated 16.05.2024, for the Assessment Years 2010-11 to 2012-13 respectively, arising out of the order passed under section 143(3) and 270A of the Act dated 22.03.2013, 20.03.2014 and 11.03.2015 respectively. Since the assessee is same, and the issues are common and identical, these appeals are clubbed and heard together and a consolidated order is passed. 2. Firstly, we take up appeal in ITA No.1316/Bang/2024 as a lead appeal and the facts are culled out therefrom. 3. Briefly stated facts of the case are assessee is engaged in the business of manufacturing / trading of Electric Motors, Alternators, Traction equipment, Transformers....
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....ng not satisfied, dismissed the appeal of the assessee. 6. The learned AR submitted that the assessee has made investments in its subsidiary viz., M/s. Kirsons BV, Netherlands, out of the accumulated interest free funds available with the assessee. He further submitted that the learned AO, observing that the assessee has secured and unsecured loans and has claimed interest expenditure of Rs. 22,56,74,000/-, concluded that assessee has utilized borrowed funds for the purpose of granting advances and investing in subsidiary companies. He further submitted that the company has accumulated share capital and reserves amounting to Rs. 19527.61 lakhs whereas the advances to sister concern is only Rs. 9118.76 lakhs. The learned AR drew our atten....
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.... is no divisible pool maintained by the assessee between the own funds and the borrowed funds. He vehemently supported the orders of the learned AO wherein the AO has analyzed the cash flow statement filed by the assessee and concluded that the assessee does not have sufficient cash balance for making investments / advances to assessee concern. He, therefore, pleaded that the order of the learned CIT(A) be upheld. 8. We have heard rival contentions and perused the material available on record including the written submissions filed by the assessee. The main contention of learned AO is the assessee has invested huge sums in the subsidiary companies out of the borrowed funds by stating that the percentage of borrowings to net worth stood a....
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.... 8. In view of the above findings, we find no reason to interfere with the judgment of the High Court in regard to the first question. Accordingly, the appeals are dismissed in regard to the first question. 10. Similarly, the Hon'ble High Court of Bombay in the case of CIT Vs. Reliance Utilities and Power Ltd., (supra) on identical facts and circumstances in para 10 has held as follows: 10. 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 the interest-free funds available. In our opinion the Supreme Court in East India Pharmaceutical Works Ltd.'s case (supra) had the occasion to con....
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....is case this presumption is established considering the finding of fact both by the CIT (Appeals) and ITAT. 11. In the instant case, Revenue is not disputing the availability of shareholders own funds but Revenue's objection is with respect to non-availability of divisible pool between own funds and borrowed funds for the purpose of making investments / advances to subsidiary / sister concerns. Various judicial decisions have consistently held and affirmed the view that when funds available, in the form of both interest free and loan funds, the presumption would arise that investments would be out of funds generated from the company provided the said funds are sufficient to making the investments. In the instance case, the share capital ....