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2022 (8) TMI 434 - AT - Income TaxDisallowance of interest u/s. 36(l)(iii) in respect of interest free loan/ advance to sister concern - HELD THAT:- seen from record, the assessee paid interest free loan to M/s. S.S. Enterprise, out of the interest free funds available with the assessee, who has made a profi during the assessment year 2015-16. It is not the case of the assessee that “borrowed funds” were given interest free loans and advances to the sister concern. Therefore the ratio of the Hon’ble Apex Court judgment in the case of S.A. Builders is not applicable to the present facts of the case. Also see PARESH LALCHAND SHAH (PROP : JYOTI STEEL CORPORATION) [2013 (4) TMI 767 - ITAT AHMEDABAD] Thus we hold that the addition made u/s. 36(1)(iii) r.w.s. 40A(2)(b) by the lower authorities are hereby deleted and the grounds of appeal raised by the assessee are hereby allowed. Addition u/s 68 - unexplained cash credit - HELD THAT:- AO in his assessment order stated no return of income filed by Ms. Rashmi Saraf and no PAN available and therefore made the addition u/s. 68 of the Act. Whereas the Ld. CIT(A) on going through the bank statement of Ms. Rashmi Saraf held that cash deposit in her bank account but actually it is a cheque deposit made by the lender. Thus factually the Ld. CIT(A) is not correct in confirming the addition of the advances. We further notice that the assessee has made TDS in the case of Ms. Rashmi Saraf and the loan is also repaid by way of cheque by the assessee through her bank account on 19.09.2015 by way of RTGS. Thus, the assessee has proved the identity, creditworthiness and genuineness of the above loan transactions with proper evidences. Therefore, the above addition of Rs. 10,00,000/- as cash credit is hereby deleted and the grounds raised by the assessee are hereby allowed.
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