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2021 (1) TMI 998 - AT - Income TaxAddition u/s 68 - unsecured loan - HELD THAT:- We consider it just and proper to send back this issue to the file of the AO for giving one more opportunity to the assessee to prove the genuineness of the relevant loans. As rightly submitted by assessee in this regard, the total loan represented opening balance to the extent of ₹ 10,66,42,149/- and the same, therefore, cannot be added to the total income of the assessee in the year under consideration as unexplained cash credit u/s 68. As regards the balance loan amount AO is directed to give one more opportunity to the assessee to explain the same by establishing the identity and capacity of the concerned loan creditors as well as the genuineness of the relevant loan transactions by adducing the necessary supporting evidence. AO is directed to decide this issue afresh to the extent of loan after necessary verification. Ground No. 1 to 3 of the revenue’s appeal are thus treated as partly allowed while ground no. 1 of the assessee’s cross-objection is treated as allowed for statistical purpose Disallowance of finance cost incurred by the assessee society - as observed that the finance cost claimed by the assessee under “Capital-Work-in- Progress” was disallowed by the authorities below on the ground that the assessee society was not registered u/s 12AA - HELD THAT:- As claimed by the assessee society by way of raising additional ground in its cross-objection which is admitted by us, it has been granted registration u/s 12AA of the Act w.e.f. A.Y. 2012-13 by CIT(Exemptions), Kolkata vide [2020 (8) TMI 49 - ITAT KOLKATA] and, therefore, the finance cost in question paid on the loans utilised by assessee society for the charitable purpose cannot be disallowed being application of income. The AO is accordingly directed to verify this claim of the assessee and allow appropriate relief to the assessee on this issue. Disallowance u/s 40A(3) - HELD THAT:- Issue covered in favour of the assessee by the various decisions of the Tribunal including the decision of Hyderabad Bench of this Tribunal in the case of Sree Education Society [2016 (4) TMI 84 - ITAT HYDERABAD] wherein it was held that no disallowance u/s 40A(3) can be made while determining the income u/s 11 of the Act of the assessee which is registered u/s 12AA of the Act. Respectfully following the said decision of this Tribunal, we delete the disallowance made by the AO u/s 40A(3) of the Act and confirmed by the Ld. CIT(A) in the case of the present assessee society which is now duly registered u/s 12AA.
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