TaxTMI 
TaxTMI 
2026 (8) TMI 1574
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.... 2. The Hon'ble CIT(A) erred in upholding the addition of Rs. 22,40,531/- made by disallowing the commission paid to daily deposit agents, not appreciating that the concerned expenditure was genuine business expenditure supported by adequate evidence and therefore the addition of Rs. 22,40,531/- on the above count was not warranted by facts and in law and is required to be deleted. 3. The Hon'ble CIT(A) erred in upholding the addition of Rs. 2,69,320/- being estimated interest income in respect of certain NPA loan transactions, which addition being not justified and may kindly be deleted. 4. The Hon'ble CIT(A) erred in upholding the addition of Rs. 28,28,825/- as estimated interest income, on the basis of assumed average rate of interest, ignoring the explanation of the appellant that different types of loans carry different rates of interest and such estimation of interest is not called for, particularly when the book results are not rejected u/s 145(3) of the I. T. Act, 1961. 5. The appellant craves leave to add, alter, amend and/or vary any of the above grounds of appeal at any time before the decision of the appeal." 2. Rival submissions of both th....
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....n support of ground No. 3 which relates to addition of Rs. 2,69,320/- as interest income. The ld AR of the assessee submits that the addition of Rs. 2,69,320/- is separately made as estimated interest in respect of loans on which interest is not received by the assessee. The details of such loan transactions are recorded at para-12 at page No. 9 to 12 of the assessment order. During the assessment proceedings, the assessee in response to the show cause notice dated. 22.02.2021, explained that all these loans are categorised as nonperforming assets (NPA). The assessee society has initiated legal action against the members, and till the time the Court decided on the issue, interest could not be charged on such NPA transactions. The AO and the ld CIT(A) has not considered the explanation and has made an addition of Rs. 2,69,320/- as estimated interest income. Such an addition is not justified. In support of ground No. 4 which relates to addition of Rs. 28,28,825/- as interest income by estimating interest based on the assumed average rate of interest, the ld AR of the assessee submits that the AO has further made an addition of Rs. 28,28,825/- as interest income, by erroneously estima....
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....rded that from the list of thirteen members in the ITR and list of 2858 members to whom loans given, it is clear that the assessee is catering to two distinct categories of people. The first category is that of resident members or ordinary members. There may not be any difficulty as far as this category is concerned. However, the assessee had carved out another category of 'nominal members'. These are those members who are making deposits with the assessee for the purpose of obtaining loans, etc. and, in fact, they are not members in real sense. Most of the business of the assessee was with this second category of persons who have been giving deposits which are kept in fixed deposits with a motive to earn maximum returns. The activity of the assessee is that of finance business and cannot be termed as co-operative society. It is also found that the assessee is engaged in the activity of granting loans to general public as well. All such activities are carried out without any approval from the Registrar of the Societies. The assessee is a cooperative credit society which is not entitled to deduction under section 80P(2)(a)(i) of the Income-tax Act. The case laws relied by th....
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....arly when it was relevant qua the issue before him. Since, the evidence filed by assessee has not been examined and considered by lower authorities, therefore, considering the relevancy of such evidence, we admitted such additional evidence filed during the first appellate stage and restore the issue back to the file of jurisdictional AO (JAO) to consider such evidence and pass order afresh in accordance with law. In the result, ground No. 2 of the appeal is allowed for statistical purpose. 7. Ground No. 3 relates to addition of Rs. 2,69,320/- as estimated income. The AO made this addition as per his finding in para 12 of assessment order. The AO noted that the assessee has not charged interest from 23 members (parties). The AO worked out that total loan of Rs. 17,95,471/- was given to such members. The AO estimated interest @ 15% per annum and worked out addition of Rs. 2,69,320/-. Before ld CIT(A) the assessee stated that loan was very old and the assessee has initiated legal action and interest will be treated on conclusion of legal proceedings. The ld CIT(A) held that no documentary evidence is filed about legal proceedings and that the by-laws of the assessee do not express....