ITAT explains presumption theory that advances to sister concerns are made from own funds

Advertisement ACIT Vs Janak Global Resources Pvt. Ltd (ITAT Chandigarh) Where sufficient own interest free funds are available with the assessee, the presumption arises that the assessee had utilised those funds for the purpose of making interest free non business advances. Thus in very clear terms the Hon’ble Apex Court in the case of Hero Cycles Pvt. Ltd. (supra) have upheld he presumption theory. In the case of Avon Cycles Ltd. (supra) the Hon’ble Apex Court held that in the fact situation where mixed funds are utilized by the assessee, the disallowance of interest to the ext...