No disallowance of Interest if assessee has own fund more than interest free advance

Brief Facts 1. Assessee has filed its return of income on 22-11-2006 and 05-10-2007 declaring a loss at Rs. 21,98,810/-and Rs. 96,91,459/- in Assessment Year 2006-07 and 2007-08 respectively. The case of the assessee was selected for scrutiny assessment and notices u/s. 143(2) of the income tax act were issued on 09-10-2007 and 18-09-2008 which were duly served upon the assessee in Assessment Year 2006-07 and 2007-08 respectively. 2. Assessee had taken a loan to the tune of Rs. 39.11 crore in Assessment Year 2006-07 and has paid interest at Rs. 44,65,790/- on such loans and in Assessment Year ...