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2024 (2) TMI 1328 - ITAT SURATAddition u/s 69 - repayments of loan/creditor - CIT(A) deleted the addition as observed that only those ‘investments’ that are found to have been ‘not recorded in the books’ qualify for addition under the said section, if assessee fails to offer proper/satisfactory explanation. HELD THAT:- In the instant case the transactions made by the assessee that are subjected to addition under this section are all reflected in the books of account maintained by him. Nowhere did the assessing officer state that these repayments were made from undisclosed sources. AO perused 3CD report and found that that repayments have been disclosed in clause 31(c) of the Tax Audit Report. CIT(A) as observed that repayments of loan/creditor cannot be regarded as 'investments' for the reason that investments are assets of the investor which are likely to yield returns and investment as such can be redeemed to obtain the principal. So, the repayment of loan disclosed in the books of account would not come under the purview of Section 69. We also note that repayment of amount was made through banking channel and also duly recorded, in the books of accounts. As gone through the party-wise, unsecured loan, findings given by the ld CIT(A) and noted that there is no infirmity in the conclusion reached by ld CIT(A). Hence, we dismiss ground No.1 raised by the Revenue. Addition on the account of Section 24 v/s business head u/s 37 - interest paid on housing loan - CIT(A) deleted addition as per Section 36(1)(iii) which is the relevant provision regarding Interest on borrowed capital, according to which the amount of interest paid in respect of capital borrowed for the purpose of Business and Profession of assessee shall be allowed - HELD THAT:- The provisions of Section 37 is a general in nature allowing deduction of an expenditure laid out or expended wholly and exclusively for the purposes of the business. Since, AO in the assessment order had given a categorical finding that the assessee had availed a loan by mortgaging a business asset and that the loan is utilised for the purposes of business, then the deduction claimed by the assessee towards interest paid on such loan utilised for the purpose of business is an allowable deduction under the head “income from business” and not under the head “income from house property”. CIT(A) correctly observed that section 36(1)(iii) of the Act, which is the relevant provision regarding Interest on borrowed capital, according to which, the amount of interest paid in respect of capital borrowed for the purpose of Business & Profession of assessee shall be allowed subject to the section 43B - CIT(A) observed that when the capital is borrowed for acquisition of a capital asset, then interest liability pertaining to the period till the date such asset is put to use shall not be allowed as deduction. Going by the fact noted by AO, in the assessment order and the relevant provisions of the IT Act, it is held by ld CIT(A) that the disallowance of interest claim to made by AO is not in accordance with the provisions of the statute and therefore, ld CIT(A) deleted the same correctly - Decided against revenue. Addition of cash deposit u/s 68 - during the demonetization period, the assessee has deposited cash in three banks - CIT(A) deleted addition - HELD THAT:- CIT(A) noted from the assessee`s balance sheet that the bank accounts in question in which the cash deposits were made by the assessee during the demonetization period formed part of its books of account. Considering the aforesaid facts, when the bank accounts in question, are all duly been accounted for by the assessee in its books of account for the year under consideration, therefore, AO by not rejecting the said books of account had clearly accepted that the cash deposited by the assessee firm during the year under consideration in the said bank accounts was out of its disclosed sources. Based on this factual position, the ld CIT(A) deleted the addition. We note that ld CIT(A) has passed a reasoned and speaking order. The conclusions arrived at by the CIT(A) are, therefore, correct and admit no interference by us - Thus dismiss the ground raised by the Revenue. Admission of additional evidenced by CIT(A) - allegation of violation of Rule 46A of the Income Tax Rules - HELD THAT:- We note that ld CIT(A), during the appellate proceedings, vide its letter dated 07.12.2022, the additional evidences submitted by the assessee before ld CIT(A), were forwarded to Assessing Officer for his examination and remand report thereon. The additional evidences were resent to Assessing Officer also, however, Assessing Officer failed to submit the remand report. Hence, we note that there was no violation of provisions of Rule 46A of the I.T. Rules, therefore, we dismiss both the grounds raised by the Revenue.
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