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2022 (4) TMI 385 - AT - Income TaxUnexplained cash credit received - disallowance of interest paid on said loans - Onus to prove - HELD THAT:- We are of the considered view that the assessee has successfully proved the identity and creditworthiness of M/s KCL Infra Projects Private Limited and has also proved that the genuineness of the transaction of loan taken by the assessee for business purpose and there remains no scope for the Ld. AO to make any addition u/s 68 of the Act for the alleged cash credit, as well as disallowance of interest paid thereon - Appeal of assessee allowed. Addition u/s 14A - HELD THAT:- We find that the assessee has not earned any dividend income during the year. Therefore, Ld. CIT(A) has rightly deleted the addition in light of the judgment of CIT vs. Correcteh Energy [2014 (3) TMI 856 - GUJARAT HIGH COURT] and Adani Enterprises Ltd. [2016 (8) TMI 163 - GUJARAT HIGH COURT]. Thus, we find no infirmity in finding of Ld. CIT(A) deleting disallowance u/s 14A - Thus, ground no.2 raised by the revenue is dismissed. Adhoc disallowance of expenses - HELD THAT:- AO has made disallowance on ad hoc basis @ 5% of the expenses. No specific observation with regard to any irregularity in the records and Books of accounts has been pointed out by Ld. AO. Thus in the given facts where the assessee owns cranes, dumpers, trailors, trolleys and trucks etc., records regarding fuel expenses, daily allowance of drivers and toll tax paid are maintained, we find no justification in such ad hoc disallowance made by the Ld. AO ignoring the books of account and the tax audit report. Thus Ld. CIT(A) has rightly deleted the said disallowance. Ground no.3 raised by the revenue is dismissed. Disallowance of agricultural income - HELD THAT:- We find that the ownership of the agricultural land by the assessee is not in dispute and only estimation of income has been made by the Ld. AO. However looking to the fact that assessee has not filed complete details, also Ld. AO has made general remarks, therefore, being fair to both the parties we estimate the disallowance of agricultural income at ₹ 1 lakh and partly allow revenue’s ground no.4 by confirming the deletion of addition at ₹ 5,80,640/- and sustaining disallowance of agricultural income at ₹ 1 lakhs. Thus ground no.4 of the revenue’s appeal is partly allowed. Disallowance of depreciation for personal use of motor car, disallowance of depreciation claimed on cameras - HELD THAT:- As we find no justification in the finding of Ld. AO as cameras are required for day to day business activities and disallowance for personal elements is not justified. However, as far as the disallowances of depreciation on motor cars are concerned we find that assessee is an individual and own ten motor cars. Undoubtedly looking to the nature of business assessee needs motor cars, however, one cannot ignore the personal element in use of the motor cars. But the action of the Ld. AO of disallowing the total depreciation claimed on Mercedes and fortuner car at ₹ 9,93,337/- is not justified as it cannot be said that these two cars have not at all being used for business purpose. Thus in order to meet end to justice 10% of disallowance of depreciation claimed on these two motor cars is sustained is disallowed. Disallowance of contribution to Provident Fund u/s 36(1)(va) - Payment before the due date of filing return of income u/s 139(1) - HELD THAT:- Recently in the case of Lumino Industries Ltd. [2021 (11) TMI 926 - ITAT KOLKATA] has held that the amendment brought in by the Finance Act 2021 w.e.f. 01.04.2021 inserting explanation to section 36(1)(va) of the Act and section 43B of the Act are prospective in nature and shall be inforce from assessment 2021-22 and onwards and therefore, for the period before such amendment, if assessee has deposited the contribution of PF and ESI for the year concerned before the due date of filing return of income u/s 139(1) of the Act, which in the instant case is well proved by the finding of Ld. CIT(A) itself, no disallowance could be made u/s 36(1)(va) of the Act. Thus, no interference is called for in the finding of Ld. CIT(A) deleting the said disallowance. Appeal of assessee allowed.
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