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2024 (3) TMI 615 - ITAT MUMBAIAddition u/s 69A - unsecured loans - as assessee did not furnish loan confirmation, copy of letter and bank statement of the lenders, thus credit worthiness and genuineness of the transaction cannot be proved - HELD THAT:- From the perusal of the bank statements, it is seen that both the parties had sufficient credit balance in their bank account before transferring the amount through RTGS to the assessee’s account and they have also acknowledged in the confirmation about giving of the loan to the assessee. Once these documents are there on record, it cannot be held that the loan is not genuine or parties did not have the creditworthiness. Accordingly, addition on account of loan is deleted. Disallowance of interest expenditure - HELD THAT:- Assessee before us has filed copy of ledger account and bank statement of the assessee and it is seen that these interests are duly reflected in the audited accounts as well as in the bank statements. From the perusal of the balance sheet it is seen that assessee had disclosed financial expenses. For interest on bank OD assessee had filed copy of ledger account of SBI and the interest was paid to the bank on OD account. Similarly, for secured and unsecured loans assessee has filed copy of bank statement and ledger account of interest paid to various parties on the loans taken. Thus, there is a genuine outgoing of interest to the banks as well as to the parties, either for OD account or the loans taken in the earlier years. Nowhere it has been brought on record or it is the case of the AO that that loans taken earlier or during the year is not for business purpose. The reason for disallowance by the ld. AO is that since assessee has not submitted how the capital went negative after the receipt of loans and how the business went into losses after receipt of loans. This cannot be the reason for disallowance of interest without doubting genuineness of the payments itself. If there are loans outstanding in the balance sheet and assessee has paid interest to these parties from his bank account, there is no reason for making any such disallowance, unless the loans in the balance sheet have been found to used for non-business purpose. Accordingly, the disallowance of interest is deleted. Assessee appeal allowed.
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