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2018 (1) TMI 330 - AT - Income TaxUnexplained cash credit u/s 68 - Held that:- The assessee had filed its income of return declaring the taxable income ₹ 2,53,39,948/- which fact is verifiable from the assessment order itself. The assessee company has share capital to the tune of ₹ 41.09 lacs and reserves and surpluses excluding share premium received during this year to the extent of ₹ 2,91,00,000/-. The assessee had turnover of ₹ 51.90 crores. These facts and figures depict that assessee is an existing profit making company and therefore, issuance of shares at a premium is justified. All the 3 ingredients required to be established u/s. 68 are established. We further find that the case laws cited by the Ld. DR are distinguishable to the facts of the present case and therefore are not applicable at this juncture. Therefore, the addition made by the AO treating the share capital and share premium as unexplained cash credit u/s 68 of the IT Act was not justified, hence, the same was rightly deleted by the Ld. CIT(A), which does not need any interference on our part, therefore, we uphold the action of the Ld. CIT(A) on this issue and reject the ground no. 1 raised by the Revenue. Disallowance of interest u/s. 36(1)(iii) - Held that:- The copy of the bank statement of Axis Bank is filed at page 75 and 76 of the paper book. The above facts prove that prior to 16.07.2008 there were no interest bearing funds taken by the assessee except vehicle loans taken in earlier years. This goes to establish that if any investment or advance was made prior to that date, the same was given out of from the assessee's own funds or out of non interest bearing funds, except the amount of ₹ 5 lacs given to Mr. Mahadev Prasad this amount of loan was given to him on 21.7.2008 and it was given out of interest bearing funds, hence, proportionate interest for eight months @ 12% was rightly considered for disallowance which amounts to ₹ 41,750/-. Keeping all we are of the considered view that the proportionate disallowance of interest on the loans and advances comes to ₹ 41,750/- only u/s. 36(1)(iii) hence, the proportionate disallowance of interest charged u/s. 36(1)((iii) was rightly deleted to the extent of ₹ 69,07,310/- and ₹ 41,750/- was rightly confirmed, which does not need any interference on our part, therefore, we uphold the action of the Ld. CIT(A) on this issue and reject the ground no. 2 raised by the Revenue.
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