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2018 (11) TMI 1320 - AT - Income TaxAddition u/s 68 - unsecured loans receipt - interest paid on unsecured loans - non appearance by creditors on summons issued to them - test of identity, creditworthiness of loan creditors and genuineness of transactions - Held that:- The interest paid on unsecured loans to all the loan creditors till the date of conversion of part of the amounts of the same into equity share capital were duly allowed as deduction by the AO - no scope for treating the loan creditors / shareholders as in-genuine- assessee had furnished all the required documents to prove that the identity of the creditors, creditworthiness of the creditors and the genuineness of transactions within the meaning of section 68 in the instant case. All the creditors had duly filed confirmations before the AO Merely because the summons issued seeking their personal appearance is not complied with, the entire transactions cannot be treated as bogus and cannot be doubted by the revenue, especially when the entire onus has been proved by the assessee in the facts of the instant case. The assessee had only converted the unsecured loans with interest into equity share capital in part in the facts of the instant case. Out of total 8 loan creditors, the assessee had received loans from 6 parties in the earlier years and were carried over as opening balances during the year under appeal. Even the sum of ₹ 15 lacs was received from 2 parties during the year were from existing loan creditors only and not new loan creditors. Hence the test of identity, creditworthiness of loan creditors and genuineness of transactions had already been tested and accepted by the revenue in the earlier year. - Decided in favour of assessee.
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