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2014 (1) TMI 1224 - AT - Income TaxDeletion made u/s 68 of the Act – Purchase of land from unsecured loans - Held that:- The assessee stated that the company purchased land in earlier years with unsecured loans - During this assessment year, the assessee-company allotted shares with premium in support of which the Balance Sheet, Form 2 of allotment shares also submitted by the assessee before the AO also – thus, there is no justice or substantial reason to add the share premium as unexplained cash credit u/s 68 of the Act - the CIT(A) was convinced with the details filed by the assessee-company and he was of the opinion that the addition made on this account is unjustified and illogical - The business of the assessee was set up and the AO recognized the same by accepting the return of income filed by the assessee- company and the assessments also completed for the A.Ys. 2007-08 and 2008-09 - The AO has not taken up any enquiry or verified and not gathered evidential proof to disallow these expenses – thus, the additions made by the AO set aside. The Revenue authorities cannot question charging of premium unless there is a provision under the Income-tax Act, 1961 - The AO having examined the parties (creditors) u/s. 133(6) of the Act and found nothing adverse against the assessee to show that the assessee's own money flew back to the assessee to these three creditors as a conduit, the AO cannot question the raising of funds by the assessee-company - having cash/fund flow is important rather than having depreciable assets - even the provisions of section 56 are not applicable to the assessment year under consideration which came into effect only from 1.10.2009 i.e., relevant to the A.Y. 2010-11 – thus, the CIT(A) has rightly deleted the addition made by the AO u/s. 68 of the Act – Decided against Revenue. Nature of activity and expenditure – Necessary for the purpose of carrying out business or not – Held that:- The assessee filed returns of income for A.Ys. 2007-08 and 2008-09 - The loss returned by the assessee for these assessment years was accepted in summary assessment - Being so, after accepting the return of income for A.Ys. 2007-08 and 2008-09, the AO cannot dispute the same figure in subsequent assessment year - Had the AO has any doubt regarding allowability of loss, first he should have questioned the same in earlier assessment year and not in the assessment year under consideration – Relying upon Deccan Goldmines Ltd. vs. ACIT [2013 (11) TMI 185 - ITAT MUMBAI] - thus, the AO is precluded in rejecting the claim of carried forward loss in the assessment year under consideration as the business was already set up – the order of the CIT(A) upheld – Decided against Revenue.
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