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of <h1>Tribunal Upholds CIT(A) Decision on Loan Additions</h1> <h3>ACIT-22 (3) Mumbai Versus M/s Rukhana Enterprises</h3> ACIT-22 (3) Mumbai Versus M/s Rukhana Enterprises - TMI Issues:Appeal against addition of loans under section 68 of the Income Tax Act for A.Y. 2010-11, 2011-12 & 2013-14.Issue 1: A.Y. 2010-11The Revenue challenged the addition of loans under section 68 of the Act and the disallowance of interest. The Assessing Officer (AO) made an addition towards loans and disallowed interest. However, during the first appellate proceedings, the AO confirmed that fresh loans received were only Rs. 30,00,000, and the remaining amount represented the opening balance. The Commissioner of Income Tax (Appeals) held that the assessee proved the necessary ingredients of Section 68, leading to the deletion of the entire addition and the interest disallowance. The Revenue's challenge was based on the tax effect, but the Tribunal found that the appeal fell within the low tax effect limit. The Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s decision based on merits and the remand report.Issue 2: A.Y. 2011-12The facts for this year were identical to A.Y. 2010-11, with no fresh loans received by the assessee. The interest disallowance made on opening balance loans also fell within the low tax effect limit. The CIT(A) granted relief to the assessee on both merits and based on the remand report. The Tribunal found no infirmity in the CIT(A)'s order and dismissed the Revenue's appeal.Issue 3: A.Y. 2013-14The AO confirmed that the total addition made in the assessment was Rs. 70,15,014, falling within the low tax effect limit. Despite an error in the appeal mentioning a higher figure, the correct amount was confirmed by the Principal Commissioner of Income Tax. The Tribunal dismissed the appeal of the Revenue based on the low tax effect circular. The Revenue was given the liberty to file a Miscellaneous Application if they could prove that the appeals did not fall within the low tax effect limit.In conclusion, the Tribunal dismissed all appeals of the Revenue for A.Y. 2010-11, 2011-12, and 2013-14, based on the findings of the CIT(A) and the low tax effect limit as confirmed by the AO and the Principal Commissioner of Income Tax.
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