TaxTMI 
TaxTMI 
2020 (10) TMI 1370
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....oration Pvt. Ltd, ITA No. 651/Ind/2019 Assessment Year 2010-11 2. The Revenue has raised following grounds of appeal; 1. That on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was justified in deleting the disallowance made by the AO of Rs. 2,71,66,288/- being unsecured loan from M/s Aereo Dealcom Pvt Ltd and interest paid thereon. 2. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was justified in deleting the disallowance made by the AO of Rs. 3,46,76,137/- being unsecured loan from M/s Chamak Trexim Pvt. Ltd and interest paid thereon. The appellant craves leave to add or deduct from or otherwise amend the above grounds of appeal. Cross Objection No. 35/Ind/2019 In Appeal No. 651/Ind/2019 Assessment Year 2010-11 3. The Assessee has raised following grounds of appeal 1. The Learned CIT(A) erred in holding that the reopening proceedings were properly and validly initiated in this case. That on the facts and in the circumstances of the case and in law, the reassessment proceedings initiated in this case are wrong, void ab-inito, without jurisdiction and bad in law and it is pray....
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....ed CIT(A) in erred Confirming the disallowance of interest paid to' M/s Aereo Dealcomm Pvt. Ltd. of Rs. 32,93,424/- made by the AO. That on the facts and in the circumstances of the case, the disallowance of interest is wrO.ng and uncalled for and is prayed to' be deleted now. 3. That the Learned CIT(A) erred in maintaining the addition of Rs. 1,08,75,000/- made by the AO u/s 68 on account of loan taken from M/s Chamak Trexim Pvt. Ltd. That on the facts and in the circumstances of the case, the said addition is wrong and uncalled for and is prayed to' be deleted now. 3.1 That the Learned CIT(A) erred in upholding the action of the AO of disallowing the interest of Rs. 28,65,473/- paid to' M/s Chamak Trexim Pvt. Ltd. That on the facts and in the circumstances of the case, the disallowance of interest is wrong and uncalled for and is prayed to' be deleted now. 4. That the Learned CIT(A) erred in upholding the action of the AO of making disallowance of Rs. 6,75,000/- and Rs. 6,00,000/- on account of interest paid to' two. 100an creditors. That on the facts and in the circumstances of the case, the 100an transactions of these cr....
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.... 42,00,000 4,76,137 Allowed Allowed Allowed Allowed 2 Admanum Finance Ltd 2009- 10 No.331/Ind/ 2018 (Assessee) Aereo Deal Com Pvt. Ltd - Loan Aereo Deal Com Pvt. Ltd - Interest Chamak Traxim Pvt. Ltd- Loan Chamak Traxim Pvt. Ltd- Interest 36,00,000 32,93,424 1,08,75,000 28,65,473 Confirmed Confirmed Confirmed Confirmed 3 Available Finance Ltd 2014- 15 No.895/Ind/2019 (Department) Aereo Deal Com Pvt. Ltd - Loan Aereo Deal Com Pvt. Ltd - Interest Chamak Traxim Pvt. Ltd- Loan Chamak Traxim Pvt. Ltd- Interest 13,00,000 16,62,641 56,00,000 35,30,521 Allowed Allowed Allowed Allowed 8. Since the issue is common relating to loan taken and interest paid to M/s. ADCPL and CTPL, as agreed by both the parties we will be adjudicating the issue on the basis of facts of M/s. Agrawal Transport Corporation Pvt. Ltd and our decision shall apply mutandis mutandis on the grounds raised in the similar cases in the case of M/s Admanum Finance Ltd and M/s Available Finance Ltd. The issue in brief is that firstly whether the Ld. A.O is justified in making the addition u/s 68 of the Act for unexplained cash credit for the loans taken from M/s ADPL and M/s CTPL and als....
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.... the fact that both the cash creditors are registered as Non Banking Finance Companies (In short NBFC) and have sufficient base of share capital and free reserve and surplus and are almost regularly offering positive income in the Income Tax Returns. Ld. CIT(A) accordingly decided the legal ground challenging the reassessment proceedings against the assessee and the remaining grounds on merits were allowed in favour of the assessee and the additions u/s 68 of the Act as well as the disallowance of interest was deleted. Now the Revenue is in appeal before the Tribunal. 11. Ld. Departmental Representative vehemently argued supporting order of Ld. A.O in the case of three assessee's namely, M/s. Aereo Deal Com Pvt. Ltd, M/s Admanum Finance Ltd and M/s Available Finance Ltd and also supported the finding of Ld. CIT(A) in the case of M/s Admanum Finance Ltd. It was also submitted that the nexus of these additions are arising out of the search and seizure operations carried out u/s 132 of the Act in the case of Mittal Group of Indore on 4.9.2015 during which office premises of Mr. Deepak Kalani was also covered. During the search share certificates of M/s. Aereo Deal Com Pvt. Ltd (In sh....
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....Transport Corporation Ltd for last many years. In the past also unsecured loans were given by Mr. Deepak Kalani through its companies to the assessee's other group companies and has charged interest. All the transactions have been carried out through banking channel and loans have been repaid along with the interest accrued there on. Ld. Counsel for the assessee further revealed an important fact that in the assessee's another group concern M/s Agrawal Coal Corporation Pvt. Ltd also loans were taken from the same lenders namely M/s ADPL and M/s. CTPL. Genuineness and creditworthiness of the loans taken by M/s. Agrawal Coal Corporation Ltd travelled up to the Hon'ble Tribunal and were decided in favour of the assessee and the addition u/s 68 of the Act for unexplained cash credit for unsecured loans taken from M/s ADPL and M/s CTPL stood deleted by the Hon'ble Tribunal vide order dated 27.6.2016. It was also mentioned that when the loan taken from M/s CTPL and M/s ADPL was repaid by M/s Agrawal Coal Corporation Ltd on the very same day those amounts were transferred to the assessee i.e. M/s. Agrawal Transport Corporation Ltd. Thus the source of source is proved on record. Ld. Counse....
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....j Plastic Industries Pvt. Ltd. (2012) 20 ITJ 103 (Trib.) Indore 15. Ld. Counsel for the assessee submitted that facts in the case of assessee(s) are distinguishable because both the lender companies are registered as Non Banking Finance Companies by Reserve Bank of India having sufficient share capital and reserve in surplus and both the lender companies were regularly assessed to tax and are showing substantial income. Genuineness of transaction is proved since the loan transactions have taken place with other group companies with same lenders and have been held to be genuine by Hon'ble Tribunal in the case of Agarwal Coal Corporation Pvt. Ltd (supra) ITA No. 202 & 294/Ind/2012 & Others dated 27.6.2016 and also the source of source have been proved as the loan which was repaid back to the lender companies by the assessee's sister group concern M/s Agarwal Coal Corporation Pvt. Ltd has been utilised in providing loans to the assessee and other companies. At the end Ld. Counsel for the assessee submitted that the case of the assessee is squarely covered by the decision of Coordinate Bench of Indore in other sister concern group M/s Agrawal Coal Corporation Pvt. Ltd (supra) for....
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....considering all necessary material facts and after discussing the finding of predecessor of Ld. CIT(A) deciding against the assessee namely M/s. Admanum Finance Ltd for similar type of transactions for the loan taken from M/s ADCPL and M/s CTPL during Assessment Year 2009-10. After detailed discussion about the identity, genuineness and creditworthiness of the cash creditors, source of the loan given to the assessee, linkage of the transaction with the search conducted u/s 132 of the Act in the case of Mr. Deepak Kalani on 4.9.2015 along with Mittal Group of Indore and considering the fate of assessment proceedings carried out in the case of lender companies (post search on 4.9.2015 and post report by DDIT (Investigation) which paved the way of making the addition by the Ld. A.O) has held the loan transaction as genuine and also accepted the creditworthiness of the lender companies observing as follows:- "4. Ground No. 1: This ground of appeal has been raised against the initiation of the reassessment proceedings u/ s 147 of the Income Tax Act, 1961. The appellant has challenged the initiation of the reassessment proceedings primarily raising the contention that, since the s....
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....m the possession of Mr. Deepak Kalani, the investigation wing passed on certain information to the then AO, on the basis of which the AO initiated the proceedings after recording proper reasons and after issuing a valid and proper notice under section 148 of the Income Tax Act, 1961. 1n response to the same the appellant also filed the return of income. The reasons so recorded, were duly supplied by the AO to the appellant, against which the appellant had also raised the objections. The AO, then disposed off the objections so raised by the appellant, by passing a speaking order subsequently, the appellant participated in the reassessment proceedings and the same were completed after taking in to account the submissions filed by the appellant- Therefore, no infirmity is found. so far as the initiation and the procedural requirements are concerned in this matter. 4.2 It is also observed that there is no concept of borrowed satisfaction in the law and the AO was justified in' reopening the case on the basis of information received by him from the Investigation Wing. It is a settled law that the information received from the Investigation Wing can be made basis of reopening of t....
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....found filed by the appellant in support of it's contentions. The AO also called for information u/s 133(6) of the Income Tax Act, 1961 and has observed in Para 5 of the assessment order that the lenders have furnished the required information which were placed on record. The AO has also discussed in detail at para nos. 6 to 6.4 about the company M/s Aereo Dealcomm Ltd. and at para nos. 7 to 7.4 about the company M/s Chamak Trexim Pvt. Ltd. and broadly the observations of the AO in respect of both the companies in para 6 to para 6.4 and in para 7 to 7.4 are identical. 5.3 It is found that the AO has recorded that the assessee has furnished the copy of ITR of both the companies from where it was found that M/s Aereo Dealcomm had shown income of Rs 8,86,387/- and M/s Chamak had shown income of Rs 17,40,714/-. It is also noted in the assessment order that the appellant submitted the confirmation, relevant bank statements, audited financial statements and assessment orders passed u/s 147 of the Income Tax Act, 1961 dated 16/11/2017 in the case of M/s Aereo Dealcomm Pvt. Ltd. and order dated 19/12/2016 in the case of M/s Chamak Trexim Pvt. Ltd. 5.4 It is further stated in the a....
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....Income Tax Act, 1961 and interest paid there on has also been disallowed. 5.8 It is seen from the assessment order passed in the present case that the AO has only doubted the creditworthiness of the lender and the genuineness of the transactions and has not disputed the identity of the loan creditors. The AO carried out independent enquiries from both the lender companies, which were also duly complied with by them by filing all the details required from them by the AO, as per the facts noted in the assessment order. There are no adverse remarks in respect of the compliances made by both these companies. 5.9 It is also evident that the identity of both these companies is established on records and is undisputed since the director of both the companies Mr. Deepak Kalani appeared before the then A 0 i.e. DCIT 1(1) on various occasions and his statements have also been found recorded on 01/12/2016 and 08/12/2016. The copies of the same have been filed by the appellant at page nos. 154 to 164 of the paper book PB-B*I. Both the companies are also assessed by their respective jurisdictional AOs, wherein assessments have also been carried out, the assessment proceedings were attende....
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....t page nos. 51 to 55 of its paper' book. The AO of this company i.e. the ITO Ward 6(1), Kolkata has made the following observations citing the reasons for the reopening of the case of Chamak for the AY 2010-11: "Information has been received from DDIT {Inv-I, Indore vide letter No: DDIT {Inv-I)-I/Ind/Mittal Group/2015-16/2926 dated 17.03.2016 along with enclosure from wherein it was written that a search & seizure operation u/s 132 was conducted on Mittal Group Indore on 04.09.2015. Original share certificates of M/s Chamak Trexim. Private Limited were in the course of search also seized which surprisingly found intact in the bound book even though at different point of times there have been different shareholders. Sri Deepak Kalani present Director of Mittal Group and also director of M/s Chamak Trexim Private Limited failed to provide any detail and further the financial transaction of the company are found to be dubious in nature. Analysis of financial data, prima-facie of M/s Chamak Trexim private Limited establishes that the concern is being utilized for providing accommodation entries to various parties of Indore. On the F. Y. 2009-10 corresponding to A. Y. 2010-11 ....
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.... total sum credited in bank account also appears greater than gross revenue. These statements related to realization of part of loan and offering same to others as loan against interest. In support of claim statement of loans and r:onfinnation accounts with PAN furnished. On verification of accounts and document it was seen that Sri Deepak Kalani being the director of company located in Indore and Kolkata had to look after official works of both companies. Sri Deepak Kalani sometime carry the documents or other paper works from one office to other and completed pending work. Information related was whether shares certificates where meant for issue or was it related of M/s Chamak Trexim Private Limited. Information as provided not related to involvement of amount escaped from assessment. Issue of duplicate copy of share certificate related to office proceeding, updation of official records and effort to enable the shareholder to have sufficient documentary evidence for investment had made. On verification of ITD/ AST value of paid up capital reported for AY 2010-11 was brought forward from AY 2-007-08 and no change in quantum of capital found till 31.03.2016. Assessee compa....
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....e certificates of MI s Chamak Trexim Private Limited were also seized which surprisingly found intact in the bound book even though at different point of times there have been different shareholders. Sri Deepak Kalani present Director of Mitral Group and also director of M/s Chamak Trexim Private Limited failed to provide any details and further the financial transaction of the company are found to be dubious in nature. Analysis of financial data, prima-facie of M/s Chamak Trexim Private Limited establishes that the concern is being utilized for providing accommodation entries to various parties of Indore. On F.Y 2010-11 corresponding to A Y.* 2011-12 M/s Chamak Trexim Private Limited has mode huge advances to some beneficiaries, whose source is doubtful to the tune of Rs. 6,15,82,961/-. ' Accordingly after received information DDIT(Inv)-I, Indore the case was put up for administrative approval. Administrative approval received. Notice u/s 148 accordingly, generated in system on 22.03.2016 and issued to assessee company by post as well as through email". 6.9 Thus the case of Chamak for AY 2011-12 was also reopened by the AO exactly on the identical information rec....
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....ate as seized was related its company and furnished list of shareholders to whom it was to be issued. Hence, on the circumstances as slated above no adverse view taken" 6.10 Therefore the cases of Chamak for A.Y.2010-11 and A.Y. 2011-12 were also reopened on the basis of same information of the Investigation Wing of Indore and same allegations were made raising doubts on the loan transactions with the appellant and other group companies and were completed after verifying the various facts as narrated by its AO* in the assessment order. 6.11 It is further observed that the assessments of Chamak for AY 2011- 12 and AY 2012-13 were also reopened under section 147 of the Income Tax Act, 1961 on the basis of the information received from ACIT(Central-1)Indore, wherein it was alleged that Chamak Trexim Pvt. Ltd. has made advances to certain concerns of Agarwal Group, sources of which were not explained. These assessments of Chamak for both the years have also been completed on 05.12.2018 by the ACIT(OSD), Ward 6(2), Kolkaua, and the observations made in the assessment order of Chamak of AY 2012-2013 (Copy enclosed at page no. 71 to 74 of Paper Book PB-B1), are abstracted as unde....
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....case summons u/s 131 were also issued to verify their books of AI cs., bank statements which were also test checked, Confirmations from Loan debtors were also obtained The assessee Co. invested to the tune of Rs. 5,99,00,000/- to different concerns. A/ R Sri Sarda produces computerised books of A/cs., Bills, Vouchers, Bank statements etc. for necessary evidence of investment mode. On going through the administrative and other expenses, It was seen that during the year, salary was debited amounting Rs. 1,57,236/- as against Rs 1,19,700/- of the last year. AIR Sri Sarda was asked for such sudden hike of salary. Sri Sarda, A/ R could not explain the same satisfactorily. His reply in this ground was only that during year, volume of Accounts job was heavier than that of the last year. But this explanation did not fit with the circumstances of the administrative expenses because during the year assessee co. debited and additional amount of Rs 18,000/- against accounting charges were there was no such claim against accounting charges at the last year. Further, the salary amount paid to employees were not. properly vouched. In the view of the above, I disallow Rs 37,536/- (cla....
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....is abstracted as under: "From the enclosed Balance Sheet! Profit & Loss Account and other enclosures, if appeared that this is the first return submitted by the assessee Company and the source of income of the assessee was from miscellaneous sources. It also appeared from the, said documents that assessee Company had infused Fresh Share capital for Rs 47,750,000/-. Again, assessee Company had received total Share Premium of 4,29,75,000/ - on account of share allotment. Thus total 'Share Capital' was raised to the tune of Rs 4,77,50,000/-. Assessee Company was asked to provide list of new Share-holders from whom such fresh 'Share Capital' was raised. The A/ R had submitted the list of Share-holders to whom Shares were allotted during the relevant previous year. Notices u/s 133(6) of the IT Act were issued to some of those new Share-holders on test- check basis but the purpose of verification of the claim made by the assessee Company in this connection. Replies were received from those Share-holders and those were considered in the light of their-capabilities to invest such huge sum to pay Share prices including premium. Copies of Bank Accounts of those Share-holde....
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....venue generations as well as profitability, the fact that there are no borrowings/ loans taken by both these companies, funds have been advanced to the appellant out of their own capital and reserves and also in view of the fact that the assessments of both the companies have been completed by their respective AOs, there remains no other criteria to judge the creditworthiness. It has to be held reasonably that the same stand properly established and there remains no. reason to doubt the veracities of the credit worthiness of these companies. 7.10 A perusal of the assessment order of the appellant shows that though it is mentioned by the AO that the creditworthiness of the lender is not established, however no cogent basis of forming such an adverse opinion has been recorded in the assessment order as to why the creditworthiness is not established. Neither any defect is found in the financials of these loan creditors nor it is pointed out that what else was required to establish the creditworthiness. Therefore, considering the financials of both the companies reflecting their substantial own net worth and also considering the profits declared by both the companies and also the fa....
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....ereo have shifted their offices from Kolkatta to Indore, and' now stand registered at 116-117 Milinda Manor, 2 RNT Marg , Indore. This is the office premises of Shri Deepak Kalani from where his all business operations are being carried out. The notices sent to Chamak and Aereo under section 133(6) of the Income Tax Act, 1961 by the AO in the present proceedings were also served on this address which were also duly complied by both these lender companies. 8.4 It is seen that this issue was also raised by the then AO i.e. DCIT1(1) while recording the statement of Mr. Deepak Kalani on 01.12.2016 in connection with the assessment proceedings of M/s Available Finance Limited, Admanum Finance Limited and Agarwal Fuel Corporation Limited in reply to Question No. 10 (Page 157 and 158 of PB-B1) explaining the reasons as to why the major investments of these two companies are in Agarwal Group of companies, Mr. Kalani replied that he is professionally associated with Agarwal Group since 1990 and the creditworthiness of Agrawal Group is proven and therefore in the interest of safety of his investments, his companies advanced loans and made investments in the Agarwal Group of Compa....
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....company or its associates have neither any ownership interest nor any say in the management of these lender companies and further stated that these companies are independently running their business, making advances and investments earning substantial taxable income and paying the good amount of taxes. 8.8 It is categorically stated by the appellant that the appellant group has no control over these entities and all the operations of these companies are being managed by Shri Deepak Kalani, who is a Chartered Accountant by profession and is engaged in the business of lending money, loan syndication, financial restructuring and allied activities since last many years and that these entities are distinct and have made investments with the appellant group on the basis of the good will and creditworthiness of Mr. Vinod Agarwal. 8.9 The above contentions of the appellant deserve to be accepted. In my opinion, as already discussed above, Mr. Deepak Kalani has properly explained the reasons for providing loan to the appellant group only. Further there is nothing on record to support the contention of the AO that both the lender companies are controlled and managed by the Agrawal Grou....
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.... not issued to any share holders. The appellant further submitted that the issue was explained by Shri Deepak Kalani through a written submission dated 07/12/2016 filed by him on 08.12.2016 before the then AO at the time of recording his statement, (copy enclosed in case of Chamak at page no. 182-292 of PB-B-I and in case of Aereo at page no, 293-389 of PB-B-I) and also through his statement recorded on 01.12.2016 in reply to Question no. 3. 8.12 I have perused the statement of Deepak Kalani and it will be worth referring to the relevant portion of the statement of Mr. Deepak Kalani recorded on 0l/12/2016, wherein while replying to the question no. 3, he stated as under : "As regards question number 22, it is submitted that the share shareholders of the two companies namely Chamak Trexim Pvt.. Ltd. and Aereo Dealcom Pvt.Ltd had lodged request for reissue of share certificates as their shores were either mutilated or lost. In response to the same while preparing duplicate share certificates entire details were mentioned right from the beginning which is not correct practice As such these certificate s were not detached from the shore certificate book and were held back and wer....
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.... the case. Therefore, the contention of Mr. Deepak Kalani that the original share certificates seized were the ones which were held back due to technical errors, which were found and seized during the search comprising of the incorrect share certificates deserves to be accepted. The appellant has also reiterated these facts in its written submissions and further submitted that this fact in itself does not cast any doubt on the creditworthiness of these companies and also on the genuineness of the transactions with the appellant company. 8.15 In my opinion, the appellant as well as Mr. Deepak Kalani have properly explained the reasons for keeping original share certificates before the AO and have also filed the copies of correspondence with the shareholders and other related documents to substantiate the same. It is also seen that Mr. Deepak Kalani through his statements recorded on 01/12/2016 and also through written submissions dated 07/12/2016 filed by him before the then AO i.e. DCIT 1(1) Indore has properly explained this issue. It is also seen that the same AO i.e. DCIT 1 (l) Indore who recorded 'reasons' for reopening this case on 10/01/2017 did not consider the ex....
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....ppellant's case is well supported by the following reasons: - Mr. Deepak Kalani and Mr. Vinod Agarwal are very well known to each other and are also professionally related since 1990; both have their roots and belongings in Kolkatta. - Mr. Deepak Kalani has properly explained the reasons of making investments with Agarwal Group of concerns considering the reputation, creditability and capabilities of the group and considering security aspects of his investments. - The transactions by Chamak and Aereo both being the registered NBFCs have been made in the normal course of their finance business and also by the Agarwal group of companies in the normal course of their business which required the funds for its working capital needs. - The transactions are through normal banking channels, on which proper interest has also been paid and TDS was also made. All the transactions are categorically confirmed by both the parties. - Mr. Deepak Ka1ani director of both the lender companies appeared before the authorities from time to time, recorded his statement furnished detailed written submissions and properly addressed all the concerns and doubts with respect to the genuinen....
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....pective group company in their regular assessment proceedings made under section 143(3) of the Income Tax Act, 1961, which additions were deleted not only by the first, appellate authority but also by the Hon'ble ITAT. A categorical finding was rendered in respect of both the lender companies with regard to their creditworthiness and also genuineness of their transactions with the appellant group by the CIT[A)-ll and also by the Hon'ble ITAT, Indore Bench. This issue is discussed at length in the later part of this order. In these peculiar facts, when these very funds were received back by the lender companies and were advanced to the appellant, the same cannot by any stretch of imagination be roped into the clutches of genuineness and creditworthiness under section 68 of the Income Tax Act, 1961. 8.18 It is' important to note here that the lender companies through the director Mr. Deepak Kalani have provided all the necessary details and also recorded their presence before the officers time and again. There is no defect found and pointed out in the trail of any transactions on records. The transactions have been confirmed by the parties and have been found entered i....
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....ce Ltd and also filed the confirmations, balance sheet, bank statement etc. Still additions u/s 68 were made by the then A0 doubting the creditworthiness of Chamak and Aereo and also genuineness of the transactions. However, in the subsequent proceedings both, the first appellate authorities as well as the second appellate authority rendered a categorical finding that the creditworthiness of both the companies as well as genuineness of the transactions were established and. delete addition made by the AO u/s 68 of the Income Tax Act, 1961. For me S25 of ready reference, the relevant findings of the CIT(A) -II Indore where this issue has been dealt (page 765 to 775 of PB - B - Il) are reproduced hereunder: - "4. Facts on record, very detailed and elaborate findings recorded by AO in the assessment order on both factual and legal aspects and in particular the result oJ enquiries emerged from ITIs deputed by AO for local enquiry at Kolkata and equally detailed and elaborate submissions filed by the appellant and voluminous documents included in compilation in support of grounds of appeal raised are very carefully taken into consideration. 4.1 The first and foremost ground of app....
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....be viewed but with suspicion and the appellant may be required to justify such receipt of money on huge premium as such transaction would defy normal financial prudence and logic. But the same degree of onus cannot be cast on the appellant to explain the loan transaction which have been repaid in a span of 1 ½ years or so when the appellant is able to discharge his: onus to establish the identity of the creditors, receipt of money through banking channel and existence and apparent financial worth of creditors as reflected from the audited accounts and IT. returns. It may be also observed that onus to establish all the three ingredients would vary from case to case identity is first ingredients, which can be established by giving complete address, physical existence of the person and I. T. particulars i.e. PAN and details of filing of return etc. In a given case, where the transaction of say a smaller amount of Rs. 50000/- or 1 lakh is involved the credit worthiness of person involving nominal income in the same range may be acceptable, but can become suspicious and doubtful if the amount advanced runs in millions and crores without there being other verifiable details a....
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....n of the company was dubious and nominal returned income was disclosed. The appellant has included a copy of NBFC registration issued by the RBI and an intimation u/s 143(1) for the AY 2009-10 where in a refund of Rs. 14.67 Lacs has been issued to this company and also assessment order passed u/s 143(3} for Asstt. Year 2003-04 of this company at page 383 & 384 wherein the source of share holders fund being share capital and share premium account was examined and found to be verifiable and detailed findings in this behalf have been recorded in the said assessment order. It. will be appropriate to reproduce the same here under for ready reference. "It also appeared front the said documents that assessee company had infused fresh share capital for Rs. 47,75,000/ -. Again assessee company had received total share premium of RsA,29,75,000/- on account of share allotment. Thus total 'Share Capital' was raised to the tune of Rs 4,77,50,000/- Assessee company was asked to provide list of new 'Share holders' from whom such fresh share capital was raised. The AR had submitted the list of Share holders to whom shares were allotted during the relevant previous year....
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....s. 85.30 lacs and net profits in excess of Rs. 14 lacs and loan in the name of appellant company is duly reflected in Schedule E of Loan and Advances at page 350 in the balance sheet of the said company. The concerned AO in the case of this company if assessment order passed u/s 143(3) for Asstt. Year 2004-05 on 31~01.2oo6 (included at page 385 & 386) has verified the source of owners fund being share capital, share premium received which were invested by way of loans and advances. In the intimation issued u/s 143(3) for AY 2009-10, the returned income has been stated at Rs: 11.66 Lacs and a refund of Rs. 11.27 lacs has been issued to this company. The said company has also complied in response to the notice issued u/s 133(6) by the AO vide reply dated 07.12.2010 at page 588. Thus in view of detailed findings arrived above in "the case of Aereo Dealcomm Put: Ltd., above, the said loan of Rs. 90 Lacs from this company is also held to be explained." 8.21 Thus it is seen that the creditworthiness of both Chamak and Aereo and also the genuineness of the transactions stand already examined and substantiated earlier in other group cases of the appellant, wherein di....
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....DIT(Inv}, Kolkata, thereby confirming the transaction with the assessee. The Income-tax Inspectors were again deputed to personally visit and make enquiries at Kolkata and collected certain information directly from the banks and filed another report dated 23.12.2010. The assessee has also submitted the confirmation letters alongwith PAN, Company's Master details with the Registrar of Companies, copy of income tax returns, auditors report of the creditor companies, Bank statements reflecting receipt and payment of the said loan amount and Form No_16A issued on tax withheld on interest paid. The assessee has placed on record requisite documents, which proved the identity, source of credit including existence and creditworthiness and genuineness of the loan. The AO has made the extensive enquiry. 23. The assessee has taken loan from Aereo Dealcomm private Limited. The assessee has submitted documentary evidence like confirmation, bank statement, income tax return, audited accounts, TDS certificate, Master data of the Company with Registrar of Companies, Memorandum of Association. The existence of the Company was inspected by the Inspector on 10.12.2010 and the AO has not dispu....
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....xistence of the Company was inspected by the Inspector on 10.12.2010. The statement of the accountant of this company was recorded wherein he confirmed the loan transaction of the assessee. In assessment year 2004-05, source of funds of this creditor company was examined and verified by the AO in its assessment proceedings u/s 143(3). The opening balance from the said company was accepted. The company has shown the interest income of Rs. 85.30 lacs and profit of Rs: 14 lacs in assessment year 2008-09 and the entire loan was repaid in February" 2010 . ...................................................... On going through the above case laws and applying them on the facts of the assessee's case, we find that the same are squarely applicable to the assessee's case. We find that in the instant case the assessee had, during the course of assessment proceedings, filed all the relevant details/ documents/ information, required by the assessing officer, as were necessary to substantiate the identity and creditworthiness of the creditor companies and also the genuineness of transaction. 34. The AO has not been able to rebut, in any manner, voluminous documentary evide....
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.... assessee from twelve companies aggregating to Rs: 6,69,00,000/- was explained, is proper and does not require any interference and the addition was rightly deleted by the Id. CIT{A) and has also rightly deleted the disallowance of interest of Rs: 1,03,20,567/- on the above loans. Ground Nos. 2 to 4 of the Revenue are dismissed." 8.22 It is also found that the above findings rendered in the case of Agrawal Coal Corporation Pvt. Ltd. by the Hon'bJc ITAT has been applied in the case of M/s Admanum Finance Ltd AY 2008-09 in appeal no. ITA 389/IND/2012 which has also been decided by the same order of the Hon'ble ITAT wherein in Para no. 105 it is held as under :- 105. In respect of Ground no. 2 regarding deletion by CIT(A) of addition of Rs. 6,08,94,415/- made by the AO u/s 68, we find that the addition was made in this case in respect of 9 Kolkata based companies on the identical facts, as it was made in the case of M/s Agrawal Coal Corporation Pvt. Ltd. for the same assessment year i. e. 2008-09. The loan creditors in' the instant appeal are also the same. 106. This issue has already been considered by us hi1e deciding ground nos. 2 to 4 in ITA No. 294/1nd/2012 ....
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....istence of such company. (v) It is further observed that the AO of Aereo has examined the source of its fund in AY 2002-03 and the AO also examined the share holders on test check basis and share holder's bank accounts were also verified. (vi) In Para 24 of its order the Hon'ble ITAT concluded "Therefore, we are of the view that the assessee has proved the identity, creditworthiness of this lender company and also the genuineness of the transactions with the said company with sufficient evidence." (vii) Similarly in respect of Chamak Trexim Pvt. Ltd. in Para 25 of the order, the Hon'ble ITAT has observed that the existence of this company was inspected by the inspector on 10.12.2010, the statement of the accountant was recorded where he confirm the loan transactions of the assessee. [viii] In the same Para 25 it is stated that in AY 2004-05 source of funds of this creditor company was examined and verified by the AO in its assessment proceedings u/s 143(3). The opening balance of loan from the said company was accepted. Further it is stated that the company has shown the interest income of Rs. 85.30 Lacs and profit of Rs. 14 Lacs in AY 200809 and t....
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..... 40 to 62 of its written submissions which have already been reproduced above. 1 have gone through the submissions and reasons of my predecessor carefully. I find sufficient force in the contention of the appellant that on the facts and circumstance of the case the findings rendered by my predecessor are not even factually correct to some extent and I do not agree with the same for the following reasons. 9.1 It has been held at Para 2.2 by my predecessor that the loan providers were not having any business activity and were having meager that they are paper / shell companies engaged in giving accommodation entries to the beneficiaries in the garb of loan. I wish to differ from such observations as both the companies i.e. Chamak and Aereo are having substantial business activities in all these years which is evident from their financials filed at page no. 02 to 48 PB- B-1 in the case and at page no. 77 to 141 PB-B-I in the case of Aereo. The appellant has also filed a table depicting the gross revenues earned by these companies in some recent years which is enclosed at page no. 01 and page No. 67 of PB-B-I. This aspect has already been discussed earlier and it is seen that both ....
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....hority but also by the Hon'ble Jurisdictional ITAT rendering categorical finding of admitting the identity and creditworthiness of these two companies and also accepting the genuineness of the transactions has also not been considered in the order passed by my predecessor. 9.6 It is seen that the above facts were duly stated before my predecessor as evident from the written submissions of the respective assessees incorporated in his order, but have not been considered by him. Therefore, it would not be proper to hold that the appellant failed to prove the genuineness of the transactions. 9.7 It is also noticed that the observation of my predecessor that once the AO doubted the creditworthiness of the creditors and genuineness of the transactions, the onus shifts back to the appellant company to offer an explanation to the satisfaction of the AO as contemplated u/s 68 of the Income Tax Act, 1961, which could have been discharged by producing the loan providers before the AO so that truth behind the smokescreen could have been untraveled by the AO by interrogating them, is misplaced since the loan provider companies i.e. Chamak and Aereo were duly produced before the DCIT 1....
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....ulatively satisfy the three prerequisite of section 68 nor they have stated as to what more was required to be done or as to what was not done for discharging the onus casted upon the assessee. 9.10 It is further noticed that the observation by my predecessor, that "the alleged loan parties were not found to be in existence and thus the onus shifts back to the appellant to produce the loan parties before the AO and if the appellant falters, the addition can be made u/s 68 of the Act is factually incorrect as this is not at all the case where the loan parties were not found to be in existence. 9.11 The appellant has also submitted that the CIT(A) has referred to the amendment made to section 68 by the Finance Act, 2012 w.e.f. 01.04.2013 and stated that the appellant is not only required to justify the source of loan but is also required to explain the source of the source of raising the loan which has held to be c1arificatory in nature. In this respect the appellant further submitted that it has duly explained the source of source of raising the loan by filing not only the bank statements of the loan creditors but also substantiating the source of source by filing the details ....
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....arding observation of my predecessor that the applicants are not having creditworthiness to invest the amounts, the facts on record do not support this observation. It seems that the fact that the individual net worth of both the companies is in the range of 7 to 8 crores each as evident from their financials already placed on record as paper book B and also from the summary table enclosed at page no. 1&76 PB-B-l have skipped the attention of my predecessor. 9.16 It is found that the major factor which weighed the decision of my predecessor treating the transactions as not genuine is the observation that these companies are hardly earning any income. However I find that this observation is not correct on facts as evident from the financials of these companies and also from the income tax returns and assessment orders passed u/s 143 (3) of the Income Tax Act, 1961. These companies are having substantial income in the form of interest receipts and have earned considerable net profits. 9.17 Further, I agree with the observation of my predecessor that creditworthiness is not proved by showing issue and receipt of cheque or by furnishing a copy of statement of bank account and whe....
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....per compliance was made by both the companies, the finding about the same has also been found recorded m the assessment order. In fact, the identity of the loan creditors is not at all disputed by the AO in the present case. It is also seen from the bank statements of the lender companies that there are no cash deposits in their bank accounts. Rather, the source of deposits in these bank accounts have been properly explained by these lender companies which has come from the other group concerns of the appellant, who repaid the loans taken by them in earlier years. 9.21 In the case of ACIT V/s Narmada Extrusion Ltd. (2012) 19 ITJ 202- ITAT Indore, relied upon .by my predecessor, the jurisdictional ITAT confirmed the addition made on account of unsecured loans received from Lunkad Group of companies u/s 68 by categorically stating that based on' the documents impounded during survey from Lunkad Group various cash entries were appearing in the name of Narmada Extrusion Ltd. against which Lunkad Group has issued cheques in favour of Narmada Extrusion Ltd. Further the assessee failed to produce the director and the Lunkad Group also failed in discharging its onus to explain the s....
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....ous years, including the year under consideration, without any adverse observation which reaffirms their identity, creditworthiness and also genuineness of the transactions. 10.1 Regarding creditworthiness, it is seen that both the lender companies possessed substantial own funds, out of which the advances have been extended to the appellant. From the balance sheets of the lenders, it is verifiable that both the companies are debt free companies i.e. these companies have no borrowings. From the audited financial statements and return of income filed, it is verifiable that both the lenders companies are doing well, earning substantial revenues and taxable income and paying good taxes on their incomes. The director of both the companies is well known and is worthy and financially resourceful person. Both these lender companies furnished their bank account statements, wherein the transactions with the appellant were properly reflecting along with their regular business transactions. The lenders have explained the source of funds which have been advanced to the appellant. It is well evident from audited financials that both the lender companies have not raised any share capital or b....
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....ous borrowers. Ld. CIT(A) has also mentioned the fact that Mr. Deepak Kalani who controls the financials of M/s ADPL and M/s CTPL is having long time friendship with the Directors of Agrawal Group of Companies and in the past also he has given loan to other group concerns of Agrawal Group on interest. 20. We further find that the issue of unexplained cash credit u/s 68 of the Act from the very same lender companies namely M/s Aereo Deal Com Pvt. Ltd and M/s Chamak Traxim Pvt. Ltd which were received by another group concern of the assessee namely M/s Agrawal Coal Corporation Pvt. Ltd and Admanum Finance Ltd came for adjudication before the Tribunal wherein the appeal was filed by the revenue challenging the finding of Ld. CIT(A) deciding in favour of the assessee. The Co-ordinate Bench has dealt this issue in Appeal No. 202&294/Ind/2012 & others in the case of Agrawal Coal Corporation Pvt. Ltd (supra) and has confirmed the finding of Ld. CIT(A) thereby confirming the identity of the lenders , genuineness of transactions and accepting the creditworthiness of the lender companies namely M/s ADPL & M/s CTPL and holding that the Ld. A.O was not justified in making the addition u/s 68 ....
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....ld not be said that the financial position of the company was dubious and nominal returned income was disclosed. 4.3.2 The appellant in another compilation (Paper Book 'D') has included a copy of NBFC registration issued by the RBI at page 836 and an intimation u/s 143(1) for the AY 2009-10 at page 835 wherein a refund of Rs 14.67 lacs has been issued to this company and also assessment order for Asstt. Year 2002~ 03 of this company at page 833 and 834 wherein the source of shareholders fund being share capital and share premium account was examined and found to be verifiable and detailed findings in this behalf have been recorded in the said assessment order. It will be appropriate to reproduce the same here under for ready reference: "It also appeared from the said documents that the assessee company had infused fresh share capital for Rs. 47,75,000/-. Again assessee company had received total share premium of Rs. 4,29,75,000/- on account of share allotment. Thus total 'Share Capital' was raised to the tune of Rs. 4,77,50,000/-. Assessee company was asked to provide list of new 'Share holders' from whom such fresh share capital was rai....
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....eedings next to the loan of Rs. 25 lacs from CHAMAK TREXIM PVT. LTD. which is also a registered NBFC with RBI it is noted that the appellant has opening balance of more than Rs. 3.91 crores from the same company during the year under consideration. A larger amount of Rs. 78.86 lacs was repaid and substantial interest of Rs. 59.19 lacs was paid after deducting the TDS. As per the repayment chart on page 851 of paper book D the loan stand fully repaid in Feb 2010. The position in respect of enquiry report submitted by Inspectors and compliances made before DDIT is exactly the same as noted in the case of Aereo Dealcomm Pvt. Ltd., above. As per relevant final accounts and other documents of this company are concerned, the same are filed in the compilation from page 201 to 245. In this company also the main source of income is interest and gross amount is reflected at Rs. 85.30 lacs and net profit is in excess of Rs. 14 lacs and loan in the name of appellant company is duly reflected including opening balance of repayment is at Rs. 3.84 crores. 4.4.1 The AO of this company for Asstt. Year 2004-05 in assessment order passed u/s 143(3) on 31.01.2006 ....
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....e-tax Inspectors were deputed personally to visit and make enquiries. The Commission was also issued to DDIT, Kolkata u/s 131 of the Act and Income tax inspectors were again deputed to personally visit and make enquiries at Kolkata and lastly the assessee was directed to furnish documentary evidences in support of the unsecured loan. The AO has issued notices directly u/s 133(6) to lenders calling for documentary evidence in support of the amounts advanced. The lender companies, in return, filed the various documents in the form of confirmations, income tax returns, bank statements etc. Income Tax Inspectors were deputed by the AO to make enquiries at Kolkata, who vide report dated 10.12.2010 confirmed existence of most of the lenders. Thereafter, Commission was issued to DDIT, AO., Kolkata under section 131 of the Act, who independently conducted investigation and sent his report dated 20.12.2010 and most of the parties appeared and filed documentary evidences as required by DDIT(AO), Kolkata, thereby confirming the transaction with the assessee. The Income-tax Inspectors were again deputed to personally visit and make enquiries at Kolkata and collected certain information directl....
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....also filed copy of the assessment order for assessment year 2002-03 of the said lender company, wherein the shareholder funds being shareholder capital and share premium account was examined and found to be verifiable. AO found that the said lender company had share capital of Rs. 47,75,000/- and it has received share premium of AO. 4,29,75,000/- on account of share allotment. The AO of the lender company has also verified the shareholder on test check basis and shareholders' bank accounts were also verified. Therefore, we are of the view that the assessee has proved the identity, creditworthiness of this lender company and also the genuineness of the transaction with the said company with sufficient evidence. 25. In the case of Chamak Trexim Private Limited, the assessee has filed documentary evidence like confirmation, bank statement, income tax return, audited report, TDS certificate, Master data of the Company with Registrar of Companies, Memorandum of Association. The existence of the Company was inspected by the Inspector on 10.12.2010. The statement of the accountant of this company was recorded wherein, he confirmed the loan transaction of the assessee. In assessmen....
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.... 2008-09. Opening balance from the said company stands accepted, since no addition was made in the AO 2007-08. The entire loan was repaid in September, 2010. The said creditor company also responded to the notices issued u/s 133(6) by the AO. Similarly, in Pushpak Trading & Consultancy (P) Limited, it had shareholder's funds of AO. 13.47 crores as on 31.3.2008.The entire loan was repaid in March, 2009. The said company is a registered NBFC. The said creditor company also responded to the notices issued u/s 133(6) by the AO and also in response to the notice issued u/s 131 by the DDIT (AO) Kolkata. Similarly, in the case of Savera Distribution Private Limited, it had shareholders funds of AO. 13.66 crores. Further, the company had shown the turnover of AO. 2.34 crores and interest income was AO. 18.72 lacs. The said creditor company also responded to the notices issued u/s 133(6) by the AO. Similarly, in the case of Paradise Garments Private Limited, it had shown the turnover of AO. 1.14 crores, interest income at AO. 59.29 lacs and its taxable income was AO. 18.50 lacs in assessment year 2008-09. The company had shareholders fund of AO. 7.62 crores as on 31.03.2008. The entire loan....
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....ction 131 at the instance of the assessee, did not pursue the matter further. The Revenue did not examine the source of income of the said alleged creditors to find out whether they were creditworthy or were such who could advance the alleged loans. There was no effort made to pursue the so-called alleged creditors. In those circumstances, the assessee could not do anything further. In the premises, if the Tribunal came to the conclusion that the assessee has discharged the burden that lay on him, then it could not be said that such a conclusion was unreasonable or perverse or based on no evidence. If the conclusion is based on some evidence on which a conclusion could be arrived at, no question of law as such arises." 29. Similarly, in the case of HON'BLE vs. Metachem Industries, 245 HON'BLE 160 (MP), Jurisdictional High Court has observed as under :- "3. We have heard the learned counsels for the parties. Section 68 of the Act says that where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the ....
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....by the assessee was dismissed by the CIT(A) as well as by the Tribunal. On further appeal before the High Court, while setting aside the matter to the assessing officer, the Court observed as under: "................. In such circumstances, we find substance in the contention of Mr. Khaitan that the order of assessment cannot be supported as the materials collected by the Assessing Officer through the Inspector which were relied upon were neither disclosed to the appellant nor was the appellant asked to explain the report submitted by the Inspector. It is now a settled law that while considering the question whether the alleged loan taken by the assessee was a genuine transaction, the initial onus is always upon the assessee and if no explanation is given or the explanation given by the appellant is not satisfactory, the Assessing Officer can disbelieve the alleged transaction of loan. But the law is equally settled that if the initial burden is discharged by the assessee by producing sufficient materials in support of the loan transaction, the onus shifts upon the Assessing Officer and after verification, he can call for further explanation from the assessee and in the....
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....account in question was not operated by them would not automatically lead to the inference that assessee deposited in the said account and, therefore, it became its unaccounted income. The CIT(A) as well as the ITAT have rightly pointed out that the necessary exercise which was to be undertaken by the Assessing Officer was not carried out. It was for the Assessing Officer to probe the matter further. He could not simply pass on the buck to the assessee asking him to produce Sh. O.P. Yadav or Sh. Mohinder Singh Yadav. It is the Department which had reopened the assessment on the basis of the statements of the Yadavs. The Department was relying upon the said statements. When the premises of M/s. Yadav and Company were searched by the Department in 2002 and the statements of aforesaid two persons were recorded, it is clear that Yadav and Company was very much in existence. More interestingly, M/s. Yadav and Company even assessed to Income-tax. In the case of assessee, the assessment was completed in December, 2003. In such a scenario, it would not have been difficult for the Assessing Officer to find the whereabouts of Yadavs particularly having regard to the statement of the assessee....
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....e appeal is thus devoid of any substance and is summarily dismissed." 33. On going through the above case laws and applying them on the facts of the assessee's case, we find that the same are squarely applicable to the assessee's case. We find that in the instant case the assessee had, during the course of assessment proceedings, filed all the relevant details/ documents/ information, required by the assessing officer, as were necessary to substantiate the identity and credit-worthiness of the creditor companies and also the genuineness of transaction. 34. The AO has not been able to rebut, in any manner, voluminous documentary evidences placed on record. In fact, disregarding the documents placed on record, the assessing officer, proceeded to make addition under section 68 of the Act, simply by cherry picking certain parts of the reports of the Inspectors of Income Tax/ Investigation Wing, without appreciating that the reports considered along with ex-parte material/ documents collected/ received from creditors, established, beyond any doubt, the ingredients of section 68 of the Act. 35. Most pertinently, the AO has not specifically dealt with any of the voluminous materi....
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....TPL were in dispute. We find that Hon'ble Tribunal after considering all the relevant facts and material; on record decided in favour of the assessee thereby confirming the finding of Ld. CIT(A) holding that the assessee has duly proved the identity of the cash creditors, genuineness of the transaction and proved creditworthiness of the lender companies which thus do not call for any addition u/s 68 of the Act and the interest paid on such loans should be allowed. 22. We also find that assessment proceedings of the alleged lender companies namely M/s ADPL & M/s CTPL have been carried out for multiple assessment years u/s 143(3)/147 of the Act but no adverse inference or action has been taken by the revenue authorities and thus accepting that the business carried out by these companies are genuine and are not bogus companies indulged in providing accommodation entries. Detail of such assessments carried out in the case of two lender companies are summarised in the following chart:- Assessment details of M/s Chamak Texim Pvt. Ltd S. No AY Date of order Passed u/s Income assessed Page No. PB-B-I Remarks 1 2004-05 31.05.06 143(3) 40,050 49-59 Last share capital and prem....
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....for the transaction carried out by group companies is proved beyond doubt and duly accepted by the Tribunal there hardly remain any scope to question it again in the case of other concerns where such type of unsecured loans are received from the same lender companies. Thus the decision of the Co-ordinate Bench in the case of M/s Agrawal Coal Corporation Pvt. Ltd (supra) is squarely applicable on the facts of the instant case and thus we hold that the loan received from M/s Aereo Dealcomm Pvt. Ltd and M/s Chamak Trexim Pvt. Ltd by M/s Agrawal Transport Corporation Pvt. Ltd, Admanum Finance Ltd and Available Finance Ltd are genuine and duly explained by the assessee(s) and the interest paid thereon as provided in the chart in the preceding paras is genuine business expenditure and the assessee(s) have duly explained the transaction of loan taken and also proved the identity, genuineness and creditworthiness of the loan creditors. We thus are of the view that respective Assessing Officers of the three assessee(s) in appeal before us erred in treating the loans taken from M/s Aereo Dealcomm Pvt. Ltd and M/s. Chamak Trexim Pvt. Ltd has unexplained cash credit u/s 68 of the Act and furth....
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....id on the unsecured loans taken from M/s Jayant Securities & Finance Ltd and Lunkward Media Entertainment Ltd respectively. 27. Brief facts relating to this issue are that during the course of reassessment proceedings carried out u/s 147 r.w.s. 143(3) of the Act Ld. A.O observed that the assessee had paid interest on unsecured loans of Rs. 6,75,000/- and Rs. 6,00,000/- taken from M/s Jayant Securities & Finance Ltd and Lunkward Media Entertainment Ltd respectively. Though no fresh loan was taken during the Year and the interest was paid on the opening balance of the loans taken in the previous year, Ld. A.O giving the finding that since both the loan provider companies are accommodation/paper/bogus company the interest paid during the year needs to be disallowed. Aggrieved with this disallowance assessee went in appeal before Ld. CIT(A) but failed to succeed as the action of Ld. A.O. was confirmed. 28. Now the assessee is in appeal before the Tribunal. 29. At the outset Ld. Counsel for the assessee submitted that this issue is squarely covered in favour of the assessee by the decision of Hon'ble Tribunal in another group concern of the assessee M/s Agrawal Coal Corpora....
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....n Pvt. Ltd (supra) for AssessmentYear 2008-09 accepting the proposition that "since no addition has been made u/s 68 in the assessee's own case, interest cannot be disallowed". 32. Now examining the facts of the instant appeal in the light of decision of Hon'ble Tribunal, we are of the view that the same is squarely applicable since no loan has been taken during the year and the loan on which interest has been paid during the year has not been subjected to addition u/s 68 of the Act and therefore the disallowance of interest of Rs. 6,75,000/- and Rs. 6,00,000/- paid to M/s Jayant Securities & Finance Ltd and M/s. Lunkward Media Entertainment Ltd respectively is uncalled for. We thus set aside the finding of Ld. CIT(A) and allow Ground No. 4 of the assessee's appeal for Assessment Year 2009-10 in the case of M/s Admanum Finance Ltd. 33. Now we will deal with Ground No. 1 of the revenue's appeal in the case of M/s Available Finance Ltd ITA No. 895/Ind/2019 for Assessment Year 2014-15. In this Ground No. 1 revenue has challenged the finding of Ld. CIT(A) restricting the addition u/s 14A of the Act at Rs. 7481 as against Rs. 38,19,444/- made by....
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....he decision relied by the Ld. Counsel for the assessee. Revenue is aggrieved with the finding of Ld. CIT(A) sustaining the disallowance of Rs. 7481/- as against Rs. 38,90,444/- computed by the Ld. A.O applying the method under Rule 8D of I.T. rules. We observe that the disallowance computed by the Ld. A.O comprises of two figures firstly the disallowance of interest expense at Rs. 33,39,713/- and the remaining part of Rs. 5,50,731/- is arrived at by applying 0.5% on the average value of investment at Rs. 11,01,46,222/-. 36. Now as far as interest disallowance is concerned we observe that during the year assessee has earned interest income which is higher than the interest paid during the year. We find that the Coordinate Bench in the case of same assessee for Assessment Year 2008-09 ITA No/389/Ind/2012 dated 27.6.2016 has held that the disallowance of interest is uncalled for if the interest expenditure during the year is less than the interest income earned during the year. Even otherwise the judgment of Hon'ble Bombay High Court in the case of CIT V/s Reliance Utilities & Power Ltd (supra) is also squarely applicable in the case of assessee as the assess....