No disallowance of interest when Interest-free advances been made out of interest-free funds

Chetankumar Raojibhai Patel Vs DCIT (ITAT Ahmedabad) Sole issue in the present appeal relates to disallowance of interest expenditure under section 36(1)(iii) of the Act. Since the assessee has demonstrated the availability of sufficient own funds for the purpose of making interest free funds, the issue, we find, is squarely covered by the decision of the Hon’ble Apex Court in the case of Reliance Industries Ltd. (supra), following which, we hold that no disallowance under section 36(1)(vii) is warranted in the facts and circumstances of the case. Accordingly, the disallowance of interest u/...