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of <h1>Tribunal allows appeal on unsecured loan & interest disallowance</h1> <h3>M/s Isha Corporation Versus Pr. CIT-6, Ahmedabad</h3> M/s Isha Corporation Versus Pr. CIT-6, Ahmedabad - TMI Issues:1. Addition of Rs. 52 lacs on account of unsecured loan taken from Shri Deelip L. Patel u/s. 68 of the Act2. Addition of Rs. 4,02,448/- on account of disallowance on interest u/s. 36(1)(iii) of the I.T.Issue 1: Addition of Rs. 52 lacs on account of unsecured loan taken from Shri Deelip L. Patel u/s. 68 of the Act:The assessee purchased an immovable property for Rs. 3.20 crores, showing part payment of Rs. 52 lacs from an unsecured loan obtained from Shri Deelip L. Patel. The Assessing Officer added this amount to the total income, alleging it was the assessee's own funds circulated. The CIT(A) upheld the addition. However, during the appellate proceedings, the assessee presented supporting documents like ledger accounts, bank statements, and loan confirmation letters. The Tribunal observed that the Assessing Officer's decision lacked supporting evidence and failed to investigate the transaction adequately. The Tribunal noted that the transaction of the loan was routed through bank accounts and repaid during the relevant year. Consequently, the appeal of the assessee on this ground was allowed.Issue 2: Addition of Rs. 4,02,448/- on account of disallowance on interest u/s. 36(1)(iii) of the I.T.:The Assessing Officer disallowed interest expenses of Rs. 4,02,448/- as the assessee paid interest at 12%/15% on an unsecured loan, higher than the interest received on a fixed deposit at 8%. The Tribunal found that the interest on the unsecured loan and the interest on the fixed deposit were of different natures. The assessee explained that funds received from flat sales were temporarily kept in fixed deposits to earn interest. The Tribunal concluded that the interest earned on surplus funds in fixed deposits could not be compared to the interest paid on the unsecured loan. As the interest paid on the unsecured loan was higher due to its nature, the disallowance made by the Assessing Officer was not justified. Consequently, this ground of appeal by the assessee was also allowed.In conclusion, the Tribunal allowed the appeal of the assessee concerning both issues. The Tribunal dismissed an additional appeal as the assessee did not press it. The order was pronounced on 07-10-2021.
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