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2016 (12) TMI 292 - AT - Income TaxLoss in subscribing to the chit fund - allowable deduction - Held that:- Considering the Instruction No. 1175 issued by the CBDT, it is obvious that if a subscriber incurs loss in subscribing to the chit fund to raise funds to use them in his business or for the business purpose, such a loss is an allowable deduction. In this view of the matter, set aside the order of the Ld. CIT(A) on this issue and delete the addition - Decided in favour of assessee. Disallowance of various expenses - Held that:- Assessing Officer disallowed on ad hoc basis ₹ 25,000/- out of the expenses claimed by the assessee under the head conveyance and entertainment by assume that there are disproportionate increase section 37 nowhere empower the Assessing Officer to disallow the expenditure in the manner the disallowance has been made by the Assessing Officer. There is no allegation that the expenses have not been incurred wholly and exclusively for the purpose of business even it is not a case of the revenue that the expenses are personal expenses or capital expenditure. Therefore, delete the disallowance of ₹ 25,000/-. Addition u/s 68 - Held that:- So far the sum of ₹ 10,000/- received from Shri Rajiv Maheswari is concerned the said loan has not been received by the assessee during the year. The amount has been received in the earlier year therefore, delete the said addition as the cash credit does not arise in the impugned assessment year. So far the sum of ₹ 10,000/- received from Ms. Vandana noted that the assessee received a sum of ₹ 16,000/- vide Cheque No. 70335 of Central Bank of India during the impugned assessment year. From the copy of the bank statement of Ms. Vandana Lalwani, found that she has deposited a sum of ₹ 20,000/- cash as on 01.03.2004 when it was having bank balance at ₹ 8815.49 and out of that accumulate balance she had issued cheque of ₹ 16,000/- to the assessee. At the most since the lender before depositing a sum of ₹ 20,000/- in cash was having bank balance of ₹ 8,815/-. Only a sum of ₹ 8,000/- out of the ₹ 16,000/-can be proved to be a genuine one. In respect of which we can say assessee has proved the creditworthiness of the lender. Therefore, sustain the addition at ₹ 8000/- out of ₹ 10,000/- sustained by the Ld. CIT(A). Thus, out of the loan taken from Ms. Vandana Lalwani addition of ₹ 8,000/- is sustained. Addition in respect of loan taken from Smt. Sapna Lalwani from the copy of the bank account filed which is available at page no. 7, it is apparent that Smt. Sapna Lalwani was having a sufficient balance in her bank account amounting to ₹ 1,21,910/- when a cheque of ₹ 1,10,000/- was issued in favour of the assessee. The identity has already been proved, this proves the genuineness of the transaction as well as creditworthiness of Smt. Sapna Lalwani. In view of this fact, delete the addition. Coming to the addition of ₹ 7,00,000/- noted that this amount has been received by the assessee from M/s. Mahadev Enterprises, a regular income for assessee having permanent account number. Thus the identity, genuineness of the transaction as payment received through cheque is proved so far creditworthiness of M/s. Mahadev Enterprises, noted that M/s. Mahadev Enterprises was having sufficient balance in his bank account before the advancing the loan to the assessee. In view of this fact, it is of the view that it is a case where the assessee has submitted sufficient evidence to explain the nature and source of the loan. This discharges onus which lie from the assessee. Therefore, set aside the order of the Ld. CIT(A) on this issue and delete the addition of ₹ 7,00,000/-. Thus, the addition of ₹ 8,30,000/- is reduced to ₹ 8,000/-,
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