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2023 (9) TMI 537 - ITAT SURATUnsecured loan received from 19 parties - certain Pvt. Ltd. companies from whom assessee has taken loan - HELD THAT:- We note that all lenders are assessed to tax. The ITR of lenders are accepted by Department u/s 143(1) of the Act and even the interest income offered by them is subjected to tax which is duly paid and hence no adverse view is called for. The loans are taken through banking channels and interest is paid to all the lenders and on which TDS is deducted. There is no finding of cash deposit in bank account of the lenders. The Confirmation of all lenders were filed during assessment proceedings and no further enquiry were deemed necessary by the Assessing Officer. Out of the 19 parties, 13 parties are directors or their relatives or sister concern from whom the assessee had also taken loan in the past which was always accepted during scrutiny assessment of earlier years. AO has made addition u/s 68 because he has doubted the creditworthiness of the certain Pvt. Ltd. companies from whom assessee has taken loans. However, it is submitted that the said companies are NBFCs and hence their purpose of the business itself is granting of loans and hence the creditworthiness is proved even if the NBFCs may be having lower income. This is because the basic criteria for NBFCs is to have minimum net worth of Rs. 2 crore, which is fulfilled and the source of these credits is already certified while making an application to RBI while forming NBFCs and the Companies have obtained the certificate of registration after fulfilling requirement of Section 45- IA of the RBI Act, 1934. On perusal of the Audit Report of these companies, it can be seen that they have followed all the RBI guidelines and prudential norms issued by RBI as certified by the auditors in the notes to accounts. It is to be appreciated that the status is “Active-Compliant” and not just Active which means that the Companies have filled the latest Form INC- 22A which was introduced to track down inactive companies or companies with dummy address. Thus, the status of NBFC being Active Compliant very much proves the existence of address of party. It is submitted that all the loans are repaid through account payee cheques in subsequent years. The Chart of Repayment in subsequent years is filed by assessee - In fact, in the subsequent year also, i.e., AY 2013-14, there was scrutiny assessment and bank statements were filed before the assessing officer and the repayment of loan were also reflected in the Tax Audit Report and the Revenue has accepted the repayment of loan. Thus, when the Assessing Officer has not disputed the repayment of loan in subsequent assessment years, no addition should be made of loan taken during the year - Decided in favour of assessee. Disallowance of general expenses claimed - disallowance of travelling expenses restricted from 20% to 10%, by CIT(A) and disallowance from 20% to 10% made on account of vehicle and telephonic expenses - HELD THAT:- Assessee incurred the expenses on account of cooly & cartage, repairs, travelling and general expenses during the year. The proper entries for the various expenses have been recorded in the books of accounts which are supported by bills/vouchers. Wherever the vouchers are not available, there is a proper system of authorization for incurring the expenses and internal vouchers are prepared and approved. So, all the expenses are supported by necessary evidence. Out of the total expenditure incurred on account of the above items only expenditure of Rs. 11,70,654/- have been incurred in cash which are also supported by bills or internal vouchers. The expenses are very reasonable as compared to last year and looking to the turnover of the assessee. However, the disallowance of 20% was made in case of travelling expenses which was reduced by the ld. CIT(A) to 10% only. In A.Y. 2010-11 also even in scrutiny assessment, no disallowance of expenses was made in regard to all the above items of expenses. Considering this factual position, we note that ld CIT(A) has passed a reasoned and speaking order. That being so, we decline to interfere with the order of Id. CIT(A) in deleting the aforesaid additions. His order on this addition is, therefore, upheld and the grounds of appeal of the Revenue are dismissed.
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