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2021 (11) TMI 625 - AT - Income TaxUnsecured loan taken - Addition u/s. 68 - HELD THAT:- AO as made the addition of unsecured loan obtained by the assessee on the basis of general observation that unsecured loan was nothing but assessee's own fund which were circulated. The finding of the AO was not supported with the relevant material and evidences, AO had also failed to controvert the supporting documents and relevant materials and the copies of bank statement of the lender and the assessee demonstrating that transaction of loan were routed through bank account and same were repaid during the year under consideration. AO has neither made any investigation and verification from the lender nor brought any relevant material on record to prove that the unsecured loan was not genuine. Therefore, we are not inclined with the decision of ld. CIT(A). Accordingly, the appeal of the assessee on this ground is allowed. Disallowance on interest u/s. 36(1)(iii) - AO has compared the payment of interest @ 12%/15% on the unsecured loan obtained by the assessee with the interest amount received by the assessee @ 8% on FDR made with the HDFC bank - HELD THAT:- Earning of interest on surplus fund maintained in FDR cannot be compared with the unsecured loan obtained by the assessee because both are of different nature as the interest on fixed deposit is specified by the bank in the form of automatic switched off fixed deposit account whenever surplus fund was available in current year, the same was transferred to fix deposit account otherwise the current account did not fetch any interest. On the other hand, the definite amount of interest paid on unsecured loan used to be on higher side compared to the interest charged on secured loan, therefore, we do not find any justification in the decision of ld. CIT(A) in sustaining the disallowance of interest payment made by the Assessing Officer. Therefore, this ground of appeal of the assessee is also allowed.
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