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2022 (7) TMI 1158 - AT - Income TaxAddition u/s 68 - identity, creditworthiness and genuineness not proved - HELD THAT:- There was no compliance of this notice also by the assessee. Then AO issued notice u/s 133(6) to the investor who had paid share application money to the assessee company towards share capital and share premium. However, the investor did not file details before the assessing officer. Therefore, we note that three ingredients of section 68, namely identity, creditworthiness and genuineness, have not been satisfied by the assessee. Hence, we are of the view that one more opportunity should be given to the assessee to furnish basic documents, as required by assessing officer before the assessing officer. Therefore, we set aside the order of CIT(A) and remit this issue back to the file of the assessing officer for denovo adjudication in accordance with law. Disallowance of interest expenses @ 12% on interest free advances given to its sister concern M/s Jay Bharat Fin stock Private Limited, when interest was incurred at the same rate by the assessee on its borrowed funds - HELD THAT:- It is settled principle of law that when the assessee has adequate interest free funds to make interest free advances to sister concerns, then no disallowance of interest expenses can be made. For this, reliance can be placed on the judgment of Hon`ble Gujarat High Court in the case of Commissioner of Income-tax, Gandhinagar vs. Rajendra Brother [2014 (9) TMI 885 - GUJARAT HIGH COURT]. We note that where the assessee was having sufficient interest free funds available with him to lend interest free advances, the ld CIT(A) was justified in deleting disallowance of interest in relation to such interest free advances.
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