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TMI Blog2021 (7) TMI 1070X X X X Extracts X X X X X X X X Extracts X X X X ..... only the opening and closing balance of the unsecured loans in group summary. The unsecured loans may increase or decrease and accrued interest is credited and the actual interest payment by the assessee. Further each unsecured loan account has to be independently dealt and if the loan account does not satisfy the three ingredients of identity, creditworthiness and genuineness of the transaction, the provisions of Sec.68 of the Act are applicable. But in the present case, the assessment order clearly indicates that the A.O has only considered the opening and closing balance of the unsecured creditors without referring to any particular loan creditor - Decided in favour of assessee. Disallowance of repairs and maintenance expenses claimed in profit and loss account - AR submitted that these are the repairs and maintenance expenditure incurred by the assessee to maintain the building in good condition and is an allowable claim - HELD THAT:- type/ nature of expenditure explained above does not qualify for deduction u/s 24 of the Act and they are necessarily incurred for maintaining the school building in usable and good condition for the safety, health and protection of school ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has erred in upholding the addition u/s 68 of I T Act, of ₹ 12,01,648/- without any comments on the closely connected issue of interest-expenses debi ted to P L a/c and pertaining to that very cash credit amount, which was allowed by the learned AO, as claimed. 2(i). The Learned CIT(Appeals) has erred in upholding disallowance of Repairs Maintenance expenditure of ₹ 18,34,622/- made by the learned AO. 2(ii) The Learned CIT(Appeals) has erred in upholding disallowance of Repairs Maintenance expenditure of ₹ 18,34,622/- without considering the details of the expenditure with supporting as called for and submitted by the Appellant. 2(iii). The Learned CIT(Appeals) has erred in upholding disallowance of 'Repairs and Maintenance' expenditure of ₹ 18,34,622/- debited in the P L Account under the head, 'operating expenses' towards school functioning, materials and other expenses without appreciating the fact that this related to only and only running Nursery and Primary schools at Kolkata, receipts wherefrom are shown separately and offered for taxation as business income. 2(iv). The Learned CIT(Appeals) has erred in upho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loans in the profit and loss account and the A.O. applying the provisions of Sec. 40(a)(ia) of the Act disallowed ₹ 10,58,541/.- (iv) The A.O. on verification of profit and loss account find that the assessee has debited the repairs and maintenance and the A.O. has called for the segment wise profit and loss pertaining to revenue generated from sale of electricity, receipts from school and derives house property and interest income. Since the assessee has not filed the details and claimed the entire business activities expenses. The A.O found that the assessee company has claimed 30% statutory deduction u/s24 of the Act in the income from house property and hence made an addition of ₹ 18,34,622/- as non allowable expenses and assessed the total income of ₹ 87,03,000/- and passed order u/s 143(3) of the Act dated 02.11.2016. 3. Aggrieved by the order, the assessee has filed an appeal before the CIT(A).The CIT(A) considered the grounds of appeal of the assessee, findings of the A.O and submissions of the assessee. Whereas, in respect of two disputed issues i.e.u/s 68 of the Act and repairs and maintenance expenses, the CIT(A) has confirmed the addition and where ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a group summary of unsecured loans. The A.O without identifying any particular unsecured loan of Mumbai or Kolkata in the group summary has made addition of difference in opening and closing balance of unsecured loans. We find that the methodology adopted by the A.O cannot be accepted, we on perusal of the group summary found that in the opening balance there are 7 unsecured loan creditors of Mumbai and 6 unsecured loan creditors of Kolkata and some of the loan creditors have been squared off during the year. Whereas, in few cases, additional loans have been accepted and the same is reflected as the closing balances in the ledger account of the group summary provided. The A.O could have made enquiry in respect of any particular unsecured loan creditor and some of the loan creditors have been repaid which was accepted. Considering the overall facts and evidences, we find the submissions of the Ld.AR are realistic and duly supported by the material and the confirmations on record. 6. We are of the substantive opinion that the A.O cannot make the addition of unsecured loans u/s68 of the Act considering only the opening and closing balance of the unsecured loans in group summary. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... these expenses and not doubted the genuineness of nature of expenditure. The A.O s only contention was that the assessee is running the school and the rental income is received and the assessee is allowed 30% of Net Rent as statutory deduction u/s 24 of the Act and therefore any other expenses incurred is not eligible for deduction. But the fact remains that the type/ nature of expenditure explained above does not qualify for deduction u/s 24 of the Act and they are necessarily incurred for maintaining the school building in usable and good condition for the safety, health and protection of school children. We are of the substantive opinion that the claim of expenses cannot be denied. Further the Ld.AR has explained that there are 3 properties and are let out and referred in the income tax return filed online with the income tax website and there is no connectivity in the properties and the school building is a independent . The Ld.AR submits that no such disallowance was made in the subsequent assessment years by the revenue. We considering the overall facts, circumstances, provisions of the law, findings and the submissions of the Ld.AR are of the opinion that assessee has vario ..... X X X X Extracts X X X X X X X X Extracts X X X X
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