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2023 (10) TMI 258 - ITAT DELHIAddition u/s 68 - unsecured loans - HELD THAT:- There is no finding of any cash deposited in the bank account of the creditors prior to disbursement of loan and no adverse finding recorded regarding the identity and existence of creditors and further no findings that the creditors were entry operators of any kind by the AO. The loans were interest bearing loans and the related interest income is duly reflected in the ITR of the Creditor Companies. AO. without having any basis observed that the Creditor Companies are ‘shell’ Companies on the basis of common Directors among Group Companies and the rotation of funds/money in the Group Companies which is unfounded. In so far as Orbit Contractors and Financial Pvt. Ltd. notice issued u/s 133(6) was not responded by the creditor. The assessee had furnished the necessary acknowledgment of ITR for Assessment Year 2014-15 and 2015-16, balance sheet and P & L Account for the year ending 31/03/2015, the assessee had also provided copy of company master data, copy of Form 16A issued for interest paid on loan received as well as the source of the lending company. The assessee had provided loan confirmation, Certificate of incorporation and PAN Number, copy of the ITR, balance sheet and P & L Account, Bank Statement of Creditor etc. as evidence for identity, creditworthiness and genuineness of the creditor. The assessee is not required to prove the source of the investment. In this case, the assessee has proved the identity of parties and genuineness of the transaction, which are being transaction through bank. The capacity of the lender cannot be doubted since there was no allegation that the assessee has rooted its own money through the investors. Further in the absence of any finding regarding cash deposited in the banks account of the creditor prior to disbursement of loan and no adverse finding regarding the identity and existence of the creditor and since all the loans were interest bearing loans and related interest income is duly reflected in the ITR of the creditor companies, in our opinion, CIT(A) has committed no error in deleting the addition. Accordingly, we find no merit in Ground No. 1 of the Revenue. Disallowance u/s 14A read with Rule 8D2 (ii) of the Rules - HELD THAT:- The assessee has to establish the availability of own fund for making investment in exempted income yielding investment. Unless the assessee established the availability of own funds, we are not in a position to uphold the argument of the Assessee's Representative. Being so, in the interest of justice, we remand the issue to the file of the A.O. with a direction to the assessee to prove the availability of own funds so as to interest in exempted income yielding investments by filing relevant cash flow/fund flow statement for the year under consideration, accordingly, we partly allow the Ground No. 2 of the Revenue for statistical purpose.
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