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2014 (1) TMI 1224 - ITAT HYDERABADDeletion made u/s 68 of the Act Purchase of land from unsecured loans - Held that:- The assessee stated that the company purchased land in earlier years with unsecured loans - During this assessment year, the assessee-company allotted shares with premium in support of which the Balance Sheet, Form 2 of allotment shares also submitted by the assessee before the AO also thus, there is no justice or substantial reason to add the share premium as unexplained cash credit u/s 68 of the Act - the CIT(A) was convinced with the details filed by the assessee-company and he was of the opinion that the addition made on this account is unjustified and illogical - The business of the assessee was set up and the AO recognized the same by accepting the return of income filed by the assessee- company and the assessments also completed for the A.Ys. 2007-08 and 2008-09 - The AO has not taken up any enquiry or verified and not gathered evidential proof to disallow these expenses thus, the additions made by the AO set aside. The Revenue authorities cannot question charging of premium unless there is a provision under the Income-tax Act, 1961 - The AO having examined the parties (creditors) u/s. 133(6) of the Act and found nothing adverse against the assessee to show that the assessee's own money flew back to the assessee to these three creditors as a conduit, the AO cannot question the raising of funds by the assessee-company - having cash/fund flow is important rather than having depreciable assets - even the provisions of section 56 are not applicable to the assessment year under consideration which came into effect only from 1.10.2009 i.e., relevant to the A.Y. 2010-11 thus, the CIT(A) has rightly deleted the addition made by the AO u/s. 68 of the Act Decided against Revenue. Nature of activity and expenditure Necessary for the purpose of carrying out business or not Held that:- The assessee filed returns of income for A.Ys. 2007-08 and 2008-09 - The loss returned by the assessee for these assessment years was accepted in summary assessment - Being so, after accepting the return of income for A.Ys. 2007-08 and 2008-09, the AO cannot dispute the same figure in subsequent assessment year - Had the AO has any doubt regarding allowability of loss, first he should have questioned the same in earlier assessment year and not in the assessment year under consideration Relying upon Deccan Goldmines Ltd. vs. ACIT [2013 (11) TMI 185 - ITAT MUMBAI] - thus, the AO is precluded in rejecting the claim of carried forward loss in the assessment year under consideration as the business was already set up the order of the CIT(A) upheld Decided against Revenue.
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