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2022 (6) TMI 1481 - ITAT MUMBAIUnexplained cash credit u/s.68 - loan received by the assessee and disallowance of interest paid on such loan - HELD THAT:- We find that assessee had also enclosed the bank statements of the lender company which proved sufficient creditworthiness available with the lender company and there was absolutely no cash deposits made in the said bank account before advancing the loan to the assessee company. Hence, the allegation levelled by the AO is factually incorrect in this regard. The loan transaction had been made through regular banking channels by account payee cheques and the said transaction is also duly reflected and disclosed in the books of accounts of the lender company. This proves the genuineness of the transaction of the loan. We find that the lender company is duly assessed to income tax which is evident from the income tax return acknowledgement enclosed before the lower authorities. This clearly proves the identity of the lender. The assessee had also filed confirmation from the lender confirming the loan transactions. All the aforesaid facts were also duly confirmed by the lender directly before the ld. AO in response to notice issued u/s.133(6) by the ld. AO. We also find from the ledger account of the lender enclosed in the paper book that the loan has been subsequently repaid by the assessee in the A.Y.2013-14. This loan has been duly subjected to interest which has been duly subjected to deduction of tax at source. All these transactions collectively prove that the entire loan transaction is genuine and hence, there is absolutely no case made out by the Revenue to make out an addition u/s.68 of the Act in the peculiar facts and circumstances of the instant case. Accordingly, the addition made u/s.68 of the Act is hereby directed to be deleted. Since the loan transaction is treated as genuine, interest paid on such loan is squarely allowable as deduction u/s.36(1)(iii) - Assessee appeal allowed.
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