Pune v. M/S. A.v. Pandhe

IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION [1] INCOME TAX APPEAL NO.924 OF 2011 The Commissioner of Income Tax-IV, Pune. ..Appellant. Vs. M/s. A.V. Pandhe...Respondent. WITH [2] INCOME TAX APPEAL NO.933 OF 2011 The Commissioner of Income Tax-IV, Pune. ..Appellant. Vs. M/s. A.V. Pandhe...Respondent. .... Mr. Vimal Gupta, for the Appellant. .... CORAM : J. P. DEVADHAR & A.R. JOSHI, JJ. DATED : 18th JANUARY, 2012. P.C. 1.Whether the ITAT was justified in allowing the interest which was disallowed by the Assessing Officer under Section 36(1)(iii) of the Income Tax Act, 1961, is the question raised in these two Appeals. 2.The assessment years involved in these two Appeals are A.Y. 1999-2000 & A.Y. 2000-01. 3.The ITAT has allowed the claim of the assessee by recording a finding of fact that in the assessment years in question the assessee had non-interest bearing funds to the tune of Rs.1,60,55,595/- and Rs.1,97,60,180/-, as against the non-interest bearing amount advances to the extent of Rs.1,26,57,408/- and Rs.1,28,15,578/-. Thus it was demonstrated by the assessee before the ITAT that still there was a surplus of non-interest bearing funds amounting to Rs.33,98,187/- for A.Y. 1999-00 and Rs.69,44,602/- for A.Y. 2000-01 which could be given by way of advance to sister concern. The Tribunal has relying upon the judgment of this Court in the case of CIT Vs. Reliance Utilities & Power Ltd., reported in [2009] 178 Taxman 135 held that if the assessee is in possession of the sufficient interest free funds then presumption goes to favour of the assessee that the investments or advances made by the assessee to the sister concerns were out of those interest free funds and therefore the interest bearing funds utilized for business cannot be disallowed. 4.In these circumstances, we see no reason to entertain these Appeals. Accordingly, both the appeals are dismissed. (A. R. JOSHI, J.) (J. P. DEVADHAR,J.)