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Issues involved: Appeal against order of Ld. CIT(A) for assessment year 2007-08 regarding deletion of addition made on account of unexplained cash credit u/s 68 and deletion of addition made on account of additional depreciation u/s 32(l)(iia).
Unexplained cash credit u/s 68: The Assessing Officer noted unsecured loans in the balance-sheet and asked for evidence regarding identity, genuineness, and creditworthiness of the depositors. The appellant claimed the depositors were close relatives with agricultural income, providing confirmations and land ownership documents. However, the A.O. added the unsecured loans as income, disallowing interest expenses. Ld. CIT(A) deleted the addition, prompting the revenue's appeal. The revenue argued lack of evidence linking secured loans of depositors to the loans given to the assessee. The Tribunal found the CIT(A)'s order unsustainable due to insufficient findings and lack of nexus between the loans. The matter was remanded to Ld. CIT(A) for a fresh decision, emphasizing a thorough examination of all aspects. Additional depreciation u/s 32(l)(iia): The A.O. disallowed additional depreciation claimed for embroidery activity, stating it did not constitute manufacturing. The appellant contended that embroidery was a manufacturing activity, supported by judicial decisions. Ld. CIT(A) deleted the disallowance based on tribunal decisions. The revenue supported the assessment order, but the Tribunal upheld the CIT(A)'s decision, citing consistent tribunal rulings and no contrary evidence presented. The revenue's appeal on this issue was rejected. In conclusion, the appeal was partly allowed for statistical purposes, with the matter of unexplained cash credit u/s 68 remanded for fresh consideration and the disallowance of additional depreciation u/s 32(l)(iia) upheld based on established tribunal decisions.
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