2023 (1) TMI 661 - AT - Income Tax
Addition u/s 14A r.w.r.8D - assessee had disallowed the expenses to the extent of dividend income earned - HELD THAT:- AO however computed the gross disallowance u/s. 14A and after giving the credit of suo moto disallowance made by the assessee, disallowed the net amount - We find that various Courts have held the disallowance u/s. 14A r.w.r 8D can never exceed exempt income earned by the assessee during particular assessment year. A reference can be made to the decision of Hon’ble Delhi High Court in the case of PCIT vs Caraf Builders & Construction (P) Ltd [2018 (12) TMI 410 - DELHI HIGH COURT] and in the case of PCIT vs. Envestor Venture Pvt. Ltd.[2021 (1) TMI 922 - MADRAS HIGH COURT]. We therefore following the aforesaid decisions of Hon’ble High Court direct the AO to delete the disallowance in excess of the suo moto amount of Rs. 65,932/- disallowed by the assessee. Thus the ground of the assessee is allowed.
Addition u/s. 68 - assessee had received unsecured loans from Madan Mohan Sarda - HELD THAT:- To discharge the burden u/s. 68 the assessee is required to offer explanation which must be backed by some reliable evidence. In the light of the applicable provisions of S.68 when the facts of the present case are seen, it is evident that in the books of the lender, shows that the lender had advanced Rs. 5,14,800/- in earlier years and during the year under consideration, it had lent to assessee Rs. 7,80,000/- through banking channels.
It is also a fact that on the amounts received as loan, assessee had paid interest and had also deducted TDS on the interest paid. The factum of lending the money through banking channels is not doubted by the Revenue. Further the identity and capacity of the lender is proved by the fact that the assessee has placed documents to show that lender is an Income Tax payer, is assessed to tax and for the year under consideration, the lender has disclosed gross total income which is more than the amount advanced. In such a situation, we are of the view that assessee has discharged the initial onus cast upon the assessee u/s. 68 of the Act.
In the absence of any material to the contrary assessee has discharged the onus of proving the identity, the creditworthiness and genuineness of the transaction. AO was not justified in invoking the provision of section 68 of the Act. We therefore the direct the deletion of addition made by AO and thus the ground of the assessee is allowed.