Disallowance of interest on presumption of use in capital work-in-progress not sustainable

Brief of the case:  In case of JCIT vs. Riddhi Siddhi Gluco Biols Ltd. The Ahmedabad tribunal has held that Interest free funds  available with assessee was much more than the interest free loan given by the assessee. A.O made proportionate disallowance merely on the presumption that the proportionate borrowed money must have been utilized for investment in capital work-in-progress. Relying  on decision, in case of CIT vs. Raghuvir Synthetics Ltd, reported in 354 ITR 222 (Guj.), but ITAT deleted disallowance. Facts of the case:  The assessee- company is manufacturing and trading of starc...