SICOM LTD., MUMBAI V. DY CIT CIRCLE- 3 (3)(1), MUMBAI

ITA 42/MUM/2020

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 8063 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-08-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2009-2010
• Appeal Filed On: 02-01-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AJAY PRATAP SINGH
• Keywords: Proportionate interest; Wholly owned subsidiary; Notional interest; Commercial expediency
• Section: 271(1)(c); 143(3); 234B; 115JB; 250

Judgement Text

ITA NO.42/MUM/2020 A.Y. 2009 - 10 M/S SICOM LTD. VS. DCIT, CIRCLE - 3(3)(1) 1 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH E MUMBAI BEFORE SHRI S.RIFAUR RAHMAN (ACCOUNTANT MEMBER) AND SHRI RAVISH SOOD (JUDICIAL MEMBER) ITA NO.42/MUM/2020 (ASSESSMENT YEAR: 2009 - 10) M/S SICOM LTD. SOLITAIRE CORPORATE PARK, BUILDING NO.4, CHAKALA, ANDHERI (EAST), MUMBAI 400 093 VS. DY. COMMISSIONER OF INCOME TAX, CIRCLE 3(3)(1), 6 TH FLOOR, ROOM NO. 609, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI 400 020 PAN NO. AAACS5524J ( ASSESSEE) (REVENUE) ASSESSEE BY : SHRI RAJAN VORA, A.R REVENUE BY : SHRI AJAY PRATAP SINGH , D.R DATE OF HEARING : 25/08/2021 DATE OF PRONOUNCEMENT : 27 /08/2021 ORDER PER RAVISH SOOD, J.M: THE PRESENT APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A) - 8, MUMBAI, DATED 23.10.2019, WHICH IN TURN ARISES FROM THE ORDER PASSED BY THE A.O U/S 143(3) R.W.S 263 OF THE INCOME TAX ACT, 1961 (FOR SHORT ACT) DATED 12.02.20 15 FOR A.Y. 2009 - 10. THE ASSESSEE HAS ASSAILED THE IMPUGNED ORDER ON THE FOLLOWING GROUNDS BEFORE US: BASED ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN JAW SLCOM LIMITED ('THE APPELLANT') RESPECTFULLY CRAVES LEAVE TO PREFER AN APPEAL AGAINST THE ORD ER DATED 23 OCTOBER 2019 PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 8 ['CIT(A)'] UNDER SECTION 250 OF THE INCOME - TAX ACT, 1961 ('ACT) ON THE FOLLOWING GROUNDS WHICH ARE SEPARATE AND WITHOUT PREJUDICE TO EACH OTHER: ITA NO.42/MUM/2020 A.Y. 2009 - 10 M/S SICOM LTD. VS. DCIT, CIRCLE - 3(3)(1) 2 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS : - DISALLOWANCE OF NOTIONAL INTEREST OF RS. 78,87,000/ - UNDER SECTION 36(1)(III) OF THE ACT ON LOAN GIVEN TO SUBSIDIARY GENERAL GROUND 1. ERRED IN CONFIRMING THE ACTION OF AO IN DISALLOWING THE NOTIONAL INTEREST OF RS.78,84,000/ - ON THE GROUND OF INTEREST FREE ADVANCE GIVEN TO SUBSIDIARY COMPANY (I.E SLCOM REALTY PVT. LTD); SUFFICIENT OWN FUNDS AVAILABLE 2. ERRED IN CON FILMING ACTION OF THE AO IN DISALLOWING NOTIONAL INTEREST OF RS.78,84,000/ - UNDER SECTIO N 36(1)(III) OF THE ACT ON THE GROUND [HAT INTEREST BEARING FUNDS WERE ADVANCED TO SUBSIDIARY COMPANY (I E. SLCOM REALTY PVT. LTD . ) WITHOUT CHARGING ANY INTEREST WITHOUT APPRECIATING THAT APPELLANT HAD SUFFICIENT OWN FUNDS; COMMERCIAL EXPEDIENCY FORGIVIN G INTEREST FREE ADVANCE; 3. ERRED IN UPHOLDING ACTION OF THE AO THAT APPELLANT FAILED TO PROVE THE COMMERCIAL EXPEDIENCY FOR PROVIDING LOAN TO SUBSIDIARY COMPANY WITHOUT APPRECIATING THAT THE COMMERCIAL EXPEDIENCY ALONG WITH RATIONALE FOR ENTIRE TRANSACTION WERE EXPLAINED DURING THE PROCEEDING; 4. ERRED IN NOT APPRECIATING THE FACT THAT THE APPELLANT IS IN THE BUSINESS OF PROJECT FINANCING AND ADVANCES WERE GIVEN TO SUBSIDIARY WHICH WAS WHOLLY AND EXCLUSIVE FOR THE PURPOSE OF BUSINESS, THEREBY NOTIONAL INTEREST CANNOT BE DISALLOWED ON SUCH ADVANCES; INTERES T UNDER SECTION 234B OF THE ACT; 5. ERRED IN LEVYING INTEREST UNDER SECTION 234B OF THE ACT; INTEREST UNDER SECTION 234C OF THE ACT 6. ERRED IN LEVYING INTEREST UNDER SECTION 234C OF THE ACT; I NITIATION OF PENALTY PROCEEDING UNDER SECTION. 271(1)(C) OF THE ACT 7. ERRED IN INITIALING PENALTY PROCEEDING UNDER SECTION 271(1)(C) OF ME ACT THE APPELLANT CRAVES, LO CONSIDER EACH OF THE ABOVE GROUNDS OF CROSS OBJECTIONS WITHOUT PREJUDICE TO EACH OTHER AND CRAVES, LEAVE TO ADD, ALTER, DELETE OR MODIF Y ALL OR ANY OF THE ABOVE GROUNDS OF CROSS OBJECTIONS. ITA NO.42/MUM/2020 A.Y. 2009 - 10 M/S SICOM LTD. VS. DCIT, CIRCLE - 3(3)(1) 3 2. BRIEFLY STATED, THE ASSESSEE COMPANY HAD ON 30.09.2009 E - FILED ITS RETURN OF INCOME FOR A.Y. 2009 - 10, DECLARING A TOTAL INCOME OF RS.78,52,57,174/ - UNDER THE NO RMAL PROVISION S AND BOOK PROFIT OF RS.153,25,77,621/ - U/S 115JB OF THE ACT. ORIGINAL ASSESSMENT WAS FRAMED BY THE A.O VIDE HIS ORDER PASSED UNDER SEC.1 43(3) OF THE ACT, DATED 30.11.2011 , DETERMINING THE TOTAL INCOME OF THE ASSESSEE COMPANY AT RS.84,24,90 ,805/ - UNDER THE NORMAL PROVISION S OF THE ACT. THEREAFTER, THE CIT, MUMBAI, VIDE HIS ORDER PASSED U/S 263 OF THE ACT, DATED 03.03.2014 SET - ASIDE THE ASSESSMENT ORDER PASSED BY THE A.O U/S 143(3) OF THE ACT, DATED 30.11.2011 AND DIRECT ED HIM TO PASS A FRESH ASSESSMENT ORDER. THE A.O GIVING EFFECT TO THE ORDER PASSED BY THE CIT U/S 263 OF THE ACT , THEREIN, VIDE HIS ORDER PASSED U/S 143(3) R.W.S 263, DATED 12.02.2015 ASSESSED THE INCOME OF THE ASSESSEE COMPANY AT RS.89,44,40,680/ - AFTER MAKING THE FOLL OWING ADDITION /DISALLOWANCE : SR. NO. PARTICULARS AMOUNT (IN RS.) 1. DISALLOWANCE OF INTEREST U/S 36(1)(III) OF THE ACT. 78,84,000/ - 2. ADDITION OF THE P ROVISION NO LONGER WRITTEN BACK. 1,84,76,000/ - 3. AGGRIEVED, THE ASSESSEE ASSAILED THE ORDER PASSED BY THE A.O U/S 143(3) R.W.S 263, DATED 12.02.2015 BEFORE THE CIT(A). ALTHOUGH, THE ADDITION MADE BY THE A.O QUA THE PROVISION NO LONGER WRITTEN BACK OF RS.1,84,76,000/ - WAS VACATED BY THE CIT(A) , H OWEVER, THE DISALLOWANCE OF THE ASSESSEES CLAIM FOR DEDUCTION OF INTEREST EXPENDITURE U/S 36(1)(III) OF RS.78,84,000/ - WAS SUSTAINED BY HIM. 4. THE ASSESSEE BEING AGGRIEVED WITH THE ORDER PASSED BY THE CIT(A) HAS CARRIED THE MATTER IN APPEAL BEFORE US. THE LD. AUTHORIZED REPRESENTATIVE (FOR SHORT A.R) FOR THE ASSESSEE AT THE VERY OUTSET SUBMITTED , THAT THE INDULGENCE OF THE TRIBUNAL WAS SOUGHT FOR ADJUDICATING THE MAINTAINABILITY OF THE ASSESSEES CLAIM FOR DEDUCTION OF INTEREST EXPENDITURE UNDER SEC. 36(1)(III) OF THE ACT. ELABORATIN G ON HIS CONTENTION, IT WAS SUBMITTED BY THE LD. A.R THAT THE A.O HAD ITA NO.42/MUM/2020 A.Y. 2009 - 10 M/S SICOM LTD. VS. DCIT, CIRCLE - 3(3)(1) 4 FAILED TO APPRECIATE THE SETTLED POSITION OF LAW THAT IF THERE BE INTEREST - FREE FUNDS AVAILABLE WITH AN ASSESSEE THAT WERE SUFFICIENT TO MEET ITS INTEREST FREE INVESTMENTS , THEN, WITHOUT PREJUDICE TO THE FACT THAT THE ASSESSEE HAD RAISED INTEREST BEARING LOAN S IT WAS TO BE PRESUMED THAT THE INVESTMENTS IN QUESTION WERE MADE BY THE ASSESSEE FROM THE INTEREST - FREE FUNDS AVAILABLE WITH IT . IT WAS SUBMITTED BY THE LD. A.R THAT TH E AFORESAID ISSUE WAS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF CIT VS. RELIANCE UTILITIES AND POWERS LTD. (2009) 313 ITR 340 (BOM). 5. PER CONTRA, THE LD. DEPARTMENTAL REPRESENTATIVE (FOR S HORT D.R) RELIED ON THE ORDERS OF THE LOWER AUTHORITIES. 6. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVE FOR BOTH THE PARTIES, PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD, AS WELL AS CONSIDERED THE JUDICIAL PRONOUN CEMENTS THAT HAVE BEEN PRESSED INTO SERVICE BY THE LD. A. R TO DRIVE HOME HIS AFORESAID CONTENTION. AS IS DISCERNIBLE FROM THE ORDERS OF THE LOWER AUTHORITIES, THE ASSESSEE COMPANY WHICH IS A NON - BANKING FINANCE COMPANY (NBFC) ENGAGED IN THE BUSINESS OF FI NANCE SUCH AS PROJECT FINANCE, LEASING, MERCHANT BANKING, INVESTMENTS AND TRADING IN SHARES , FINANCIAL SERVICES AND ADVISORY BUSINESS , HAD DURING THE YEAR UNDER CONSIDERATION GIVEN AN INTEREST ADVANCE OF RS.6.57 CRORES TO ITS 100% SUBSIDIARY COMPANY VIZ. S ICOM REALTY PVT. LTD. (SRPL). OBSERVING, THAT THE ASSESSEE WHICH HAD RAISED INTEREST BEARING FUNDS HAD DIVERTED THE SAME TO THE AFORESAID EXTENT FOR GIVING OF INTEREST - FREE ADVANCE TO SRPL, THE CIT WAS OF THE VIEW THAT THE A.O WHILE FRAMING THE ASSESSMENT HAD ERRED IN NOT DISALLOWING THE ASSESSEES CLAIM FOR DEDUCTION OF THE CORRESPONDING INTEREST UNDER SEC. 36(1)(II) OF THE ACT. BACKED BY HIS AFORESAID CONVICTION THE CIT CALLED UPON THE ASSESSEE TO EXPLAIN THAT AS TO WHY THE ORDER PASSED BY THE A.O U/S 143 (3), DATED 30.11.2011 BEING ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE ON THE AFORESAID ASPECT BE NOT SET - ASIDE IN EXERCISE OF THE POWERS VESTED WITH HIM U/S 263 OF THE ACT. AS THE REPLY ITA NO.42/MUM/2020 A.Y. 2009 - 10 M/S SICOM LTD. VS. DCIT, CIRCLE - 3(3)(1) 5 FILED BY THE ASSESSEE DID NOT FIND FAVOUR WITH THE CIT, THEREFORE, HE VIDE HIS ORDER PASSED UNDER SEC 263 OF THE ACT, DATED 03.03.2014 , INTER ALIA , ON THE AFORE SAID ASPECT SET - ASIDE THE ORDER THAT WAS PASSED BY THE A.O U/S 143(3), DATED 30.11.2011, WITH A DIRECTION TO HIM TO FRAME A FRESH ASSESSMENT. IN THE BA CKDROP OF THE AFORESAID DIRECTION OF THE CIT, THE A.O VIDE HIS ORDER PASSED U/S 143(3) R.W.S 263, DATED 12.03.2015 DISALLOWED THE INTEREST PERTAINING TO THE INTEREST - FREE ADVANCE OF RS.6.57 CRORE THAT WAS GIVEN BY THE ASSESSEE TO ITS SUBSIDIARY COMPANY, VIZ. SRPL AND WORKED OUT A DISALLOWANCE OF RS.78,84,000/ - . ON APPEAL, THE CIT(A) UPHELD THE DISALLOWANCE OF THE ASSESSEES CLAIM FOR DEDUCTION OF INTEREST EXPENDITURE OF RS.78,84,000/ - MADE BY THE A.O. 7. BEFORE US, THE ASSESSEE HA D ASSAILED THE DISALLOWANCE OF THE AFORESAID INTEREST EXPENDITURE U/S 36(1)(III) OF THE ACT, INTER ALIA, FOR THE REASON THAT THE ASSESSEE HAD SUFFICIENT SELF - OWNED FUNDS TO HAVE SOURCED THE AFOREMENTIONED INTEREST - FREE ADVANCE OF RS.6.57 CRORE THAT WAS GIV EN TO ITS SUBSIDIARY COMPANY. ON A PERUSAL OF THE RECORDS, WE FIND THAT THE ASSESSEE HAD SUMMARIZED THE DETAILS OF OWNED FUNDS, BORROWED FUNDS , AND ADVANCE S THAT WERE MADE BY THE ASSESSEE ON 31 ST MARCH, 2009, AS UNDER: OWN FUNDS (RS IN LAKHS PARTICULARS 31 ST MARCH, 2009 31 ST MARCH 2008 INCREASE SHARE CAPITAL 6,287.00 6,287.00 - GENERAL RESERVE 9,969.94 9,731.24 238.70 SURPLUS IN PROFIT & LOSS ACCOUNT 19,041.79 12,188.23 6,853.56 TOTAL (A) 35,298.73 28,206.47 7,092.26 BORROWED FUNDS RS IN LAKHS PARTICULARS 31 ST MARCH 2009 31 ST MARCH 2008 INCREASE SECURED LOANS 2,21,089.03 1,90,553.21 30,535.82 UNSECURED LOANS 23,301.56 18,494.13 4,807.43 TOTAL (B) 2,44,390.59 2,09,047.34 35,343.25 LOANS& ADVANCES RS IN LAKHS LOANS ADVANCED 2,53,730.81 2,03,222.75 50,508.06 ADVANCES AND DEPOSITS 17,539.31 15,725.89 1,813.42 TOTAL (C) 2,88,043.62 2,44,895.67 43,14795 IT IS STATED BY THE ASSESSEE THAT THOUGH THERE HAD BEEN AN INCREASE IN THE BORROWED FUNDS, LOANS AND ADVANCE S DURING THE YEAR UNDER CONSIDERATION, ITA NO.42/MUM/2020 A.Y. 2009 - 10 M/S SICOM LTD. VS. DCIT, CIRCLE - 3(3)(1) 6 HOWEVER, THERE HA D ALSO BEEN AN INCREASE IN THE OWNED FUNDS OF THE ASSESSEE BY AN AMOUNT OF RS.70.92 CRORES WHICH WAS MORE THAN SUFFICIENT FOR SOURCING THE INTEREST - FREE ADVANCE OF RS.6.57 CRORE THAT WAS GIVEN TO ITS SISTER CONCERN, VIZ. SRPL. 8. ADMITTEDLY, THE FACT THAT THE ASSESSEE HAD SUFFICIENT OWNED FUNDS TO SOURCE THE INTEREST - FREE ADVANCE OF RS.6.57 CRORE THAT WAS GIVEN TO ITS SUBSIDIARY COMPANY IS NOT IN DISPUTE. THE CONTROVERSY INVOLVED IN THE PRESENT APPEAL HINGES AROUND THE ASPECT , THAT AS PER THE DEPARTMENT IF AN ASSESSEE HAD BORROWED CERTAIN FUNDS ON WHICH LIABILITY TO PAY INTEREST IS BEING INCURRED ; AND ON THE OTHER HAND HAD ADVANCED CERTAIN AMOUNTS TO ITS SISTER CONCERN OR OTHER THIRD PARTIES WITHOUT CHA RGING ANY INTEREST AND WITHOUT ANY BUSINESS PURPOSE, THEN , THE PROPORTIONATE INTEREST CORRELATING TO THE AMOUNT SO ADVANCE D WITHOUT CHARGING ANY INTEREST WAS LIABLE TO BE DISALLOWED U/S 36(1)(III) OF THE ACT. WE ARE OF A STRONG CONVICTION THAT THE AFORESAI D VIEW TAKEN BY THE LOWER AUTHORITIES IS ABSOLUTELY MISCONCEIVED AND IN FACT MISPLACED. IN OUR CONSIDERED VIEW , IF THERE BE INTEREST - FREE FUNDS AVAILABLE WITH AN ASSESSEE WHICH ARE SUFFICIENT TO MEET ITS INTEREST FREE INVESTMENTS ; AND AT THE SAME TIME THE ASSESSEE HAD RAISED INTEREST BEARING LOAN S , THEN , THE PRESUMPTION WOULD BE THAT THE INVESTMENT S IN QUESTION WERE MADE BY THE ASSESSEE FROM THE INTEREST - FREE FUNDS SO AVAILABLE WITH IT . OUR AFORESAID VIEW IS FORTIFIED BY THE JUDGMENT OF THE HONBLE HIGH COU RT OF BOMBAY IN THE CASE OF CIT VS. RELIANCE UTILITIES & POWER LTD. (2009) 313 ITR 340 (BOM). IN ITS AFORESAID ORDER THE HONBLE HIGH COURT HAD OBSERVED THAT IN CASE IF THE ASSESSEE HAD ADVANCED INTEREST - FREE AMOUNT S OUT OF ITS MIXED FUNDS I.E INTEREST FRE E AND INTEREST BEARING FUNDS LYING IN COMMON POOL , THEN, THE PRESUMPTION WOULD BE THAT THE AMOUNT SO ADVANCED WAS FROM THE INTEREST - FREE FUNDS AVAILABLE WITH THE ASSESSEE COMPANY . FOR THE SAKE OF CLARITY THE OBSERVATION OF THE HONBLE HIGH COURT IS CULLED OUT AS UNDER: ITA NO.42/MUM/2020 A.Y. 2009 - 10 M/S SICOM LTD. VS. DCIT, CIRCLE - 3(3)(1) 7 10. IF THERE BE INTEREST - FREE FUNDS AVAILABLE TO AN ASSESSEE SUFFICIENT TO MEET ITS INVESTMENTS AND AT THE SAME TIME THE ASSESSEE HAD RAISED A LOAN IT CAN BE PRESUMED THAT THE INVESTMENTS WERE FROM THE INTEREST - FREE FUNDS AVAILABLE, IN OUR OPINION THE SUPREME COURT IN FAST INDIA PHARMACEUTICAL WORKS LTD. (SUPRA) HAD THE OCCASION TO CONSIDER THE DECISION OF THE CALCUTTA HIGH COURT IN WOOLCOMBERS OF INDIA LTD. (SUPRA) WHERE A SIMILAR ISSUE HAD ARISEN. BEFORE THE SUPREME COURT IT WAS ARGUED TH AT IT SHOULD HAVE BEEN PRESUMED THAT IN ESSENCE AND TRUE CHARACTER THE TAX ES WERE PAID OUT OF THE PROFITS OF THE RELEVANT YEAR AND NOT OUT OF THE OVERDRAFT ACCOUNT FOR THE RUNNING OF THE BUSINESS AND IN THESE CIRCUMSTANCES THE APPELLANT WAS ENTITLED TO CLA IM THE DEDUCTIONS. THE SUPREME COURT NOTED THAT THE ARGUMENT HAD CONSIDERABLE FORCE, BUT CONSIDERING THE FACT THAT THE CONTENTION HAD NOT BEEN ADVANCED EARLIER IT DID NOT REQUIRE TO BE ANSWERED. IT THEN NOTED THAT IN WOOTCOMBER'S CASE (SUPRA) THE CALCUTTA HIGH COURT HAD COME TO THE CONCLUSION THAT THE PROFITS WERE SUFFICIENT TO MEET THE ADVANCE TAX LIABILITY AND THE PROFITS WERE DEPOSITED IN THE OVERDRAFT ACCOUNT OF THE ASSESSEE AND IN SUCH A CASE IT SHOULD BE PRESUMED THAT THE TAX ES WERE PAID OUT OF THE PROFITS OF THE YEAR AND NOT OUT OF THE OVERDRAFT ACCOUNT FOR THE RUNNING OF THE BUSINESS. IT NOTED THAT TO RAISE THE PRESUMPTION, THERE SUFFICIENT MATERIAL AND THE ASSESSES HAD URGED THE CONTENTION BEFORE THE HIGH COURT. THE PRINCIP LE THEREFORE WOULD BE THAT IF THERE ARE FUNDS AVAILABLE BOTH INTEREST - FREE AND/OR LOANS TAKEN, THEN A PRESUMPTION WOULD ARISE T HAT INVESTMENTS WOULD BE OUT OF THE INTEREST - FREE FUND GENERATED OR AVAILABLE WITH THE COMPANY, IF THE INTEREST - FREE FUNDS WERE S UFFICIENT TO MEET THE INVESTMENTS, IN THIS CASE THIS PRESUMPTION IS ESTABLISHED CONSIDERING THE FINDING OF FACT BOTH BY THE CIT(A) AND TRIBUNAL. ALSO, THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF CIT - 2, MUMBAI, VS. HDFC BANK LIMITED (2014) 366 ITR 5 03 (BOM), HAD OBSERVED , THAT WHERE THE ASSESSEES FUNDS AND OTHER NON - INTEREST BEARING FUN D S WERE MORE THAN THE INVESTMENTS MADE IN TAX FREE SECURITIES, THEN , IT WOULD HAVE TO BE PRESUMED THAT THE INVESTMENTS SO MADE BY THE ASSESSEE WERE OUT OF THE INTEREST - FREE FUNDS AVAILABLE WITH IT. ACCORDINGLY, IN THE BACKDROP OF THE AFORESAID SETTLED POSITION OF LAW, WE ARE UNABLE TO PERSUADE OURSELVES TO SUBSCRIBE TO THE VIEW TAKEN BY THE LOWER AUTHORITIES WHO HAD DISALLOWED THE ASSESSEES CLAIM FOR DEDUCTION OF THE INTEREST EXPENDITURE UNDER SECTION 36(1)(III) OF THE ACT, FOR THE REASON , THAT AS THE ASSESSEE WAS IN RECEIPT OF INTEREST BEARING FUNDS, T HEREFORE, IT WAS TO BE PRESUMED THAT THE INTEREST - FREE FUNDS GIVEN BY IT TO ITS SUBSIDIARY COMPANY, VIZ. SRPL W ERE OUT OF SUCH INTEREST BEARING FUNDS. WE, THUS, NOT FINDING FAVOR WITH THE VIEW TAKEN BY THE LOWER AUTHORITIES SET - ASIDE THE ORDER PASSED BY THE CIT(A) , ITA NO.42/MUM/2020 A.Y. 2009 - 10 M/S SICOM LTD. VS. DCIT, CIRCLE - 3(3)(1) 8 TO THE EXTENT HE HAD UPHELD THE DISALLOWANCE OF THE ASSESSEES CLAIM FOR DEDUCTION OF INTEREST EXPEND ITURE OF RS.78,84,000/ - U/S 36(1)(III) OF THE ACT . 9. RESULTANTLY, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED IN TERMS OF OUR AFORESAID OBSERVATIONS. ORDER PRO NOUNCED IN THE OPEN COURT ON 27 .08.2021 SD/ - SD/ - (S.RIFAUR RAHMAN) (RAVISH SOOD) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; DATED: 27 .08.2021 PS: ROHIT COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) - 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE . BY ORDER, //TRUE COPY// (SR. PRIVATE SECRETARY) ITAT, MUMBAI