VSF Realtors P.Ltd, New Delhi V. ACIT, Circle-26(2), New Delhi

CO 218/DEL/2018

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 4894 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 3 month(s) 17 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 30-03-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2014-2015
• Appeal Filed On: 13-12-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: TAPAS MISHRA
• Keywords: Deemed dividend
• Section: 68; 143(3); 2(22)(e); 143(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES “F” : DELHI BEFORE SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER AND SHRI N.K. CHOUDHARY, JUDICIAL MEMBER ITA.No.6470/Del./2018 Assessment Year 2014-15 The ACIT, Circle-26(2), Room No.192, C.R. Building, New Delhi. vs. M/s. VSF Realtors Pvt. Ltd., B-35, Lajpat Nagar-II, New Delhi – 110 024. PAN AAACV2821R (Appellant) (Respondent) C.O.No.218/Del./2018 Arising out of ITA.No.6470/Del./2018 - Assessment Year 2014-15 M/s. VSF Realtors Pvt. Ltd., B-35, Lajpat Nagar-II, New Delhi – 110 024. PAN AAACV2821R vs. The ACIT, Circle-26(2), Room No.192, C.R. Building, New Delhi. (Cross Objector) (Respondent) For Revenue : Shri Vipul Kashyap, SR DR For Assessee : Shri Tapas Mishra, Advocate & Shri Manpreet Bagga, C.A. Date of Hearing : 10.03.2022 Date of Pronouncement : 31.03.2022 2 ITA.No.6470/Del./2018 M/s. VSF Realtors Pvt. Ltd., New Delhi. ORDER PER ANIL CHATURVEDI, A.M. : This appeal filed by the Revenue has been directed against the Order of the Ld. CIT(A)-9, New Delhi, Dated 03.07.2018, relating to the A.Y. 2014-15. The assessee has also filed the Cross Objections (CO) in support of the order of the Ld. CIT(A). 2. Briefly, the facts of the case as culled out from the material on record are as under : 2.1. Assessee is a company stated to be engaged in the business of trading in real estate and renting of properties. The assessee electronically filed its return of income for the assessment year 2004-15 on 14th September 2014 declaring loss of Rs.1,01,90,321/-. The case was selected for scrutiny and thereafter the assessment was framed under section 143(3) of the I.T. Act, 1961 vide order dated 30.12.2016 wherein the total income was determined at Rs.,3,63,63,281/-. 3 ITA.No.6470/Del./2018 M/s. VSF Realtors Pvt. Ltd., New Delhi. 2.2. Aggrieved by the order of the A.O. assessee carried the matter in appeal before the Ld. CIT(A) who vide order dated 3rd July 2018 in Appeal No.594/16-17 dated 03.07.2018 has allowed the Appeal of the assessee. 3. Aggrieved by the order of the Ld. CIT(A), the Revenue is now in appeal before the Tribunal and has raised the following Grounds : 1. On the facts and circumstances of the case the learned CIT(A) has erred in deleting the addition u/s 2(22)(e) of Rs.85,45,000/- without appreciating the detailed reasons given in the assessment order and without appreciating the fact that even if the payments have been transferred from M/s Samara India Pvt. Ltd. to the assessee company on the instruction of Sh. Rajnish Wadhawan as held by the Ld. CIT(A) then also the transaction between M/s Samara India Pvt. Ltd. and the assessee company was loan transaction and thus the provision u/s 2(22)(e) was applicable. 4 ITA.No.6470/Del./2018 M/s. VSF Realtors Pvt. Ltd., New Delhi. 2. On the facts and circumstances of the case the Ld.CIT(A) erred in deleting the disallowance of Rs.41,02,909/- u/s 40A(2) without appreciating the detailed reasons given in the assessment order. 3. On the facts and circumstances of the case the Ld.CIT(A) erred in deleting the addition u/s 68 of Rs.2,00,00,000/- without appreciating the detailed reasons given in the assessment order and without appreciating the fact that the assessee failed to establish the creditworthiness of Avinash Wadhawan. 4. On the facts and circumstances of the case the Ld.CIT(A) erred in deleting the addition of Rs.l,39,05,693/-(revenue expenses held as capital expenditure by AO) without appreciating the detailed reasons given in the assessment order. 5. On the facts and circumstance of the case the order of the Ld.CIT(A) is perverse. 5 ITA.No.6470/Del./2018 M/s. VSF Realtors Pvt. Ltd., New Delhi. 6. The appellant craves, leave or reserving right to amend modify, alter, add of forego any ground(s) of appeal at any time before or during the hearing of this appeal.” 4. The assessee in its cross objections has raised the following grounds: “On the facts and circumstances of the case the Ld.CIT(A) erred in not accepting the claim of the assessee that the rate of interest charged by the sister concern on unsecured loans and advances to assessee was reasonable and fair.” 5. We first proceed with the Revenue’s appeal. 5.1. Ground No.1 is with respect to deletion of addition of Rs.85,45,000/- under section 2(22)(e) of the Income Tax Act, 1961. 5.2. During the course of assessment proceedings and on perusal of the bank statement the A.O. noticed that the assessee has received funds from M/s. Samara India Private Limited and the total amount received during the year 6 ITA.No.6470/Del./2018 M/s. VSF Realtors Pvt. Ltd., New Delhi. aggregated to Rs.80,45,000/- (the details of which are tabulated at Page-2 of the assessment order). The A.O. also noticed that Shri Rajnish Wadhawan and Shri Anish Wadhwan hold 33.50% shares of the company and on perusal of the audited Balance Sheet of M/s. Samara India Private Limited, he noted that Shri Rajnish Wadhwan held 33.33% of its shares and Mr Anish Wadhwan held 21.84% of its shares. He on examination of the audited Balance Sheet of M/s. Samara India Private Limited noticed that as on 31.03.2014 the surplus in the Profit and Loss account stood at Rs.3,00,77,593/-which according to the AO meant that it had sufficient accumulated and distributable profits as on 31.03.2014. The A.O. also noted that since M/s. Samara India Private Limited and assessee were both Private Limited companies, they cannot be treated as company in which public are substantially interested. In view of his aforesaid observations, the A.O. asked the assessee to show cause as to why the amount of Rs.80,45,000/- received by the assessee from Samara India 7 ITA.No.6470/Del./2018 M/s. VSF Realtors Pvt. Ltd., New Delhi. Private Limited not be treated as deemed dividend under section 2(22)(e) of the Income Tax Act 1961. 5.3. The assessee inter alia, submitted that there was no transaction between M/s. Samara India Private Limited and the assessee company. It was submitted that Shri Rajnish Wadhwan, Director had given loan to M/s. Samara India Private Limited and Samara India Private Limited was directed to issue a cheque by debiting his loan account. The submissions of the assessee were not found acceptable to A.O. The A.O. held that the provisions of section 2(22)(e) were attracted in the present case. He accordingly made addition of Rs.85,45,000/- as deemed dividend under section 2(22)(e) of the Income Tax Act 1961. 5.4. Aggrieved by the order of the A.O. assessee carried the matter before the Ld. CIT(A). Before the Ld. CIT(A) it was inter alia submitted that the assessee had not paid but on the contrary it had received the sum from shareholder/director during the relevant year and, therefore, the provisions of section 2(22)(e) were not triggered. It was further submitted that Shri Rajnish 8 ITA.No.6470/Del./2018 M/s. VSF Realtors Pvt. Ltd., New Delhi. Wadhwan also had an outstanding loan receivable from M/s. Samara India Private Limited, out of which the said sums were received by the assessee as loan from Shri Rajnish Wadhwan. 5.5. After considering the submissions of the assessee, the details and documents including the bank statement and ledger account of the loan balances in the books of the assessee as well as the related company, CIT(A) has given a finding that though the transfer of funds was between the companies, but the transaction was carried-out under the instructions of Director Shri Rajnish Wadhwan through his outstanding loan account maintained in both the companies. He has further given a finding that M/s. Samara India Private Limited had transferred the funds on behalf of and under the directions of Shri Rajnish Wadhwan debiting his loan account and the assessee had received the same as loan on account of Shri Rajnish Wadhwan which was credited in his name. He has, thereafter, given a finding that the transaction involved was not really in the nature of loan from M/s. Samara India Private Limited to the 9 ITA.No.6470/Del./2018 M/s. VSF Realtors Pvt. Ltd., New Delhi. assessee, but, it was a loan transaction between Shri Rajnish Wadhwan and the assessee. He, thus, held that the provisions of Section 2(22)(e) of the Income Tax Act 1961 in the aforesaid circumstances does not apply and accordingly directed deletion of the addition. 6. Aggrieved by the order of the Ld. CIT(A), the Revenue is now before us. 7 Before us the Ld. D.R. took us through the findings of the A.O. and supported the order of A.O. 8. The Learned A.R, on the other hand reiterated the submissions made before the A.O. and the Ld. CIT(A) and supported the order of the Ld. CIT(A). He further pointed to the copy of the loan account in the name of Shri Rajnish Wadhwan appearing in the books of M/s. Samara India Private Limited and the loan account of Shri Rajnish Wadhwan appearing in the books of the assessee. He, thereafter pointed to the transfer of funds between the aforesaid accounts. He thereafter submitted that the transaction was between Shri Rajnish Wadhwan and the 10 ITA.No.6470/Del./2018 M/s. VSF Realtors Pvt. Ltd., New Delhi. assessee and therefore the provisions of s. 2(22)(e) were not attracted. He, thus, supported the order of the Ld. CIT(A). 9. We have heard the rival submissions and perused the material available on record. The issue in the present ground is with respect to the deletion of addition of the deemed dividend made by the A.O. under section 2(22)(e) of the Income Tax Act 1961. The A.O. had made addition under section 2(22)(e) of the I.T. Act, 1961 on account of the loan received by the assessee from M/s. Samara India Private Limited. The Ld. CIT(A) after considering the submissions of the assessee, the bank account, the ledger account of the loan balances in the books of the assessee as well as the related company, has given a finding that the transaction involved was not in the nature of loan from M/s. Samara India Private Limited to assessee, but, rather it was a loan transaction between Shri Rajnish Wadhwan and the assessee wherein the funds were transferred on his direction from his loan account with M/s. Samara India Private Limited to the assessee company and, therefore, the provisions of section 2(22)(e) of the Income Tax Act, 1961 11 ITA.No.6470/Del./2018 M/s. VSF Realtors Pvt. Ltd., New Delhi. are not applicable. Before us no fallacy in the findings of the Ld. CIT(A) has been pointed out by the Revenue. In such circumstances, we find no reason to interfere with the order of the Ld. CIT(A) and thus, Ground No.1 of Revenue is dismissed. 10. Ground No.2 is with respect to deleting the disallowances of Rs.41,02,909/- under section 40A(2) of the I.T. Act, 1961. 10.1. During the course of assessment proceedings, the A.O. on perusing the details furnished by the assessee noticed that assessee had availed loans from Punjab and Sind Bank at an interest rate of 9.56%, whereas it was paying interest at the rate of 16.34% on the loans availed from M/s. Samara Automax Private Limited, a related party. The assessee was asked to show cause the reasons for paying excess interest to M/s. Samara Automax Private Limited and why the excess interest be not disallowed under section 40A(2)(a) of the Income Tax Act 1961. The assessee inter alia, submitted that the loan from Punjab and Sind Bank was a secured overdraft, the security being company’s 12 ITA.No.6470/Del./2018 M/s. VSF Realtors Pvt. Ltd., New Delhi. fixed deposit pledged to the bank. It was further submitted that in case of secured overdraft, generally 5% over and above the interest rate on fixed deposit is charged on loan and, therefore, the bank has charged only 9.56% as interest. As far as the interest payment at 16.34% by the assessee to its associated concern was concerned, it was submitted that the normal rate of interest on loan charged by the bank to the similarly engaged companies in real estate activity was 20% and since assessee was paying the interest at 16.34% it was lower when compared to the market rate. The submissions of the assessee were not found acceptable to A.O. The A.O. was of the view that assessee had paid excess interest to M/s. Samara Automax Private Limited and the excess interest being worked out by the A.O. was to the extent of Rs.41,02,909/- (being the difference in rate between 16.34% and 9.56%). He accordingly made addition of Rs.41,02,909/-. 10.1. Aggrieved by the order of the A.O, assessee carried the matter in appeal before the Ld. CIT(A). Before the Ld. CIT(A), it was submitted that the loan from M/s. Samara 13 ITA.No.6470/Del./2018 M/s. VSF Realtors Pvt. Ltd., New Delhi. Automax Private Limited was an unsecured loan which was made available to the assessee within a short period of time without any significant paper work in contrast to the loan from bank which was a secured loan and which require a lot of paperwork. It was further submitted that the State Bank of India Benchmark Prime lending rate during the relevant year was in the range of 14.45% to 14.75% per annum for secured loans and the interest rate for the concerns in real estate business was around 20% per annum and considering the business exigency, the interest paid by the assessee was not excessive. 10.2. The Ld. CIT(A) agreed with the view of the assessee that the interest rate of secured loan cannot be compared with that of the unsecured loan, but, however held that Benchmark Prime lending rate of the bank was the most appropriate tool to determine whether interest paid was in excess or not. He accordingly held that the assessee can be given the benefit of interest payment at a maximum BPLR rate at 14.5% to 15% applicable during the year and the difference may be disallowed. He accordingly directed 14 ITA.No.6470/Del./2018 M/s. VSF Realtors Pvt. Ltd., New Delhi. the A.O. to re-compute the disallowance at the rate difference between the prime lending rate vis-à-vis the rate on which the assessee paid interest. He thus accordingly granted partial relief to the assessee. 11. Aggrieved by the order of the Ld. CIT(A), the Revenue is now before us and to the extent of addition upheld by CIT(A), Assessee is before us in the CO. 12. Before us, the Ld. D.R. took us to go through the order of the A.O. and supported his order. 13. The Learned A.R. on the other hand, reiterated the submissions made before the Ld. CIT(A) and further submitted that though it was submitted before the Ld. CIT(A) that the State Bank of India Benchmark Prime lending rate ranges between 14.45% to 14.75% per annum for secured loans, but, however the Ld. CIT(A) has wrongly considered the rate of 14.45% to 15% as interest rate for unsecured loans. In support of his aforesaid contention, he pointed to the assessee’s submission at para 2.6 on page 9 of CIT(A)’s order. He further submitted that the Benchmark 15 ITA.No.6470/Del./2018 M/s. VSF Realtors Pvt. Ltd., New Delhi. Prime Lending rate is the benchmark rate or a bare minimum rate below which the bank does not lend the money and generally the loans are made available by the banks at a rate higher than the benchmark rate. He thereafter submitted that the loan obtained from M/s. Samara Automax Private Limited was an unsecured loan which did not involve much of paper work, whereas, the secured loan from banks involve lot of paperwork and further the interest on overdraft charged by the bank was 5 % over and above the fixed deposits which were kept as security with the bank. He therefore submitted that CIT(A) has erred in directing the AO to consider the SBI Benchmark Prime Lending rate of secured loan to work out the excess interest on unsecured loan taken by the assessee. He, therefore, submitted that no addition is called for with respect to the disallowance under section 40A(2) and the disallowance directed by the Ld. CIT(A) may also be deleted. 16 ITA.No.6470/Del./2018 M/s. VSF Realtors Pvt. Ltd., New Delhi. 14. We have heard the rival submissions and perused the material available on record. The issue in the present ground is with respect to the disallowance on account of interest paid on unsecured loan u/s 40A(2)(a) of the Act. 14.1. Section 40A(2) of the Income-tax Act, 1961, puts a curb on expenditure in respect of which payment has been made to close associates having substantial interest in the company for goods, services and facilities. Under this section, the Assessing Officer can disallow only that portion of the total expenditure, which, in his opinion, is excessive or unreasonable. It is a settled law that reasonableness of any expenditure is to be seen from the view point of the businessman and not from the view point of the Revenue authorities. The Revenue has to place on record evidence as regards excessiveness or unreasonableness. The Assessing Officer must establish that the payment is excessive or unreasonable. The authorities cannot proceed merely on the basis of surmises and conjectures. 17 ITA.No.6470/Del./2018 M/s. VSF Realtors Pvt. Ltd., New Delhi. 14.2. It is an undisputed fact that assessee had obtained the secured loan from Bank at 9.56% whereas the loan received from M/s. Samara Automax Private Limited, a related party, was an unsecured loan at 16.34%. 14.3. It is a universally accepted fact that the rate of interest at which secured loans are available are lower than the rates at which the unsecured loans are available in view of the basic underlying nature of the loan. It is a well-known fact that the interest charged on unsecured loans are higher than the interest charged on secured loans in view of the fact that secured loans as the name suggests, are secured and are generally secured either by a mortgage or hypothecation of certain properties, whereas on the other hand, unsecured loans are not secured and therefore the lender carries much more risk and therefore the rates at which the amount lent on secured loans are lower than the rates at which the unsecured loans are lent. Before us, the Learned AR has pointed to the State Bank of India Benchmark Prime lending rate to be in the range of 14.5% to 15% for secured loans. We further find that before CIT(A), 18 ITA.No.6470/Del./2018 M/s. VSF Realtors Pvt. Ltd., New Delhi. assessee with the support of data available on SBI website and stated that the benchmarking rate for secured loans was in the range of 14.45% to 14.75%. The aforesaid fact has not been converted by the Revenue. 14.4. Further, Revenue has not placed any material on record to demonstrate that the benchmarking rate of unsecured loan by the bank was lower than the rate at which the assessee has been lent money. In view of the totality of the aforesaid facts, we are the view that the interest rate which has been charged to assessee by M/s. Samara Automax Private Limited at 16.34% cannot be considered to be excessive. Further Revenue has not placed any material on record to demonstrate the comparative rate charged in the open market on similar unsecured loans. We are thus of the view that no addition under section 40A(2) is called for in the present case. We thus direct the A.O. to delete the addition. Ground No.2 of the appeal of the Revenue is dismissed and the cross objection of the assessee is allowed. 19 ITA.No.6470/Del./2018 M/s. VSF Realtors Pvt. Ltd., New Delhi. 15. Ground No.3 of the Revenue is with respect to deletion of addition of Rs.2 crores under section 68 of the Income-Tax Act 1961. 15.1. During the course of assessment proceedings, the A.O. noticed that the assessee had received substantial loan aggregating to Rs.15,78,79,446/-, from several parties including Directors and Shareholders (the details of which are tabulated by the A.O. in para 3.1 of the order). The assessee was asked to prove the creditworthiness of the parties by explaining their source for giving the loans. The assessee filed the detailed submissions. 15.2. With respect to loan of Rs.2,02,38,000/- received from Shri Avinash Wadhwan AO noted that the income declared by him was only to the extent of Rs.39,821/-. Before AO assessee submitted that Shri Avinash Wadhwan is a non resident based in Kuwait for more than 45 years who had in the past invested in various companies in India and the source of the present investment was out of the withdrawal of loan given to associated company. The submissions of the assessee was not found acceptable to 20 ITA.No.6470/Del./2018 M/s. VSF Realtors Pvt. Ltd., New Delhi. A.O. The A.O. noted that though the assessee has proved the Identity of the lender, but, the creditworthiness and genuineness of the loan has not been proved. He was of the view that assessee has failed to prove the primary source of its fund, the creditworthiness in respect of the loan. He, therefore, out of the total loans of Rs.15,78,79,446/- received from various parties, considered the loan to the extent of Rs.2 crores only received from Shri Avinash Wadhwan to be unexplained and made its addition under section 68 of the Income Tax Act 1961. 15.3. Aggrieved by the order of the A.O, the assessee carried the matter before the Ld. CIT(A). Before the Ld. CIT(A) the assessee reiterated that Shri Avinash Wadhwan was a non-resident based out of Kuwait since more than 45 years and he was engaged in the business of trading of Automobile parts and all the investments made by him in the past were out of the foreign remittances through proper banking channels. In support of his aforesaid contentions, assessee also filed the copies of the PAN, ITR, bank statements, audited financial statements of M/s. Samara 21 ITA.No.6470/Del./2018 M/s. VSF Realtors Pvt. Ltd., New Delhi. India Private Limited and M/s. Samara Automax India Private Limited and statement of accounts. It was further submitted that the income tax return filed in India reflected only the income that accrued in India. The Ld. CIT(A) after considering the submissions of the assessee deleted the addition made under section 68 of the I.T. Act, 1961 by observing as under : “5.13. I have considered the facts of the case and submission of the appellant. I find that onus is on the assessee to prove the identity, creditworthiness as well as genuineness of the loan received. The Appellant obtained an unsecured loan from its shareholder and director namely Mr. Avinash Wadhawan and provided his PAN, bank statements, Income Tax Return, Statement of Affairs. It also submitted the audited financial statements of the appellant company. The lender i.e. Mr. Avinash Wadhawan is a shareholder and director of the Company, hence the identity of the lender cannot be doubted under any circumstance. 22 ITA.No.6470/Del./2018 M/s. VSF Realtors Pvt. Ltd., New Delhi. 5.14. Further, it has been submitted that Mr. Avinash Wadhawan is a non-resident living in Kuwait for the past 45 years. He is in the business of trading in automobile parts in Kuwait since then and has made investments in companies over a period of many years out of foreign remittances. It has been further observed that Mr. Avinash Wadhawan has been filing his income tax returns in India declaring his income accrued in India and has also been subjected to detailed scrutiny under section 143(3) of the Act in the past previous year i.e. AY 2013-14. A copy of the said assessment order acknowledging these facts has been placed. 5.15. Further, ledger accounts were called from the Appellant for the last four years including the impugned year of Mr. Avinash Wadhawan in the books of accounts of various companies in which he has made investments. The requisite details were filed by the appellant which is placed in record. It has been observed from the above documents that all the investments and loans of Mr. Avinash Wadhawan have 23 ITA.No.6470/Del./2018 M/s. VSF Realtors Pvt. Ltd., New Delhi. been made over the last many years and the source of the impugned loan of Rs.2,00,00,000/- provided by Mr. Avinash Wadhawan to the appellant company, is from withdrawal of his loan balance outstanding in other associate companies. 5.16. I have also perused the balance sheet of Mr. Avinash Wadhawan for the F.Y 2013-14 and from there it is noted that he has a capital account credit balance of Rs.20.01 crores and a loan liability from ICICI Bank Ltd for Rs.1.08 crores against which, amongst others, he has granted loan and advances amounting to Rs. 9.77 crores, investment 9.84 crores and fixed assets of 97.3 lakhs. As noted earlier, Mr. Avinash Wadhawan being a non resident Indian i.e NRI who is residing in Kuwait since long has also been assessed for his Indian income. Assessment has been made without any adverse finding by the AO in the AY 2013-14 wherein his returned income at Rs.18.60 lakhs has been accepted whereas in the assessment year 2014-15 his income has been accepted under 143(1) of the Act. 24 ITA.No.6470/Del./2018 M/s. VSF Realtors Pvt. Ltd., New Delhi. 5.17 Thus, from the details and documents filed before the AO and also submitted before the undersigned being called for, the appellant company is found to have discharged its onus of proving identity, creditworthiness and genuineness of transaction. The details of financial facts do not leave any scope of adverse interpretation in terms of S. 68 of the Act. Resultantly, the loan of Rs.2 crores provided by the Sh. Avinash Wadhawan to the appellant company is found a bonafide and explained transaction. Hence, the impugned addition is directed to be deleted. The appellant succeeds in this ground of appeal.” 16. Aggrieved by the order of the Ld. CIT(A), the Revenue is now before us. 17. Before us, the Ld. D.R. supported the order of the A.O. 18. The Learned A.R. of the assessee on the other hand, reiterated the submissions made before the A.O. and the Ld. CIT(A) and supported the Order of the Ld. CIT(A). 25 ITA.No.6470/Del./2018 M/s. VSF Realtors Pvt. Ltd., New Delhi. 19. We have heard the rival submissions and perused the material available on record. The issue in the present ground is with respect to deletion of the addition made under section 68 of the Income Tax Act 1961. We find that the Ld. CIT(A) while deleting the addition has given a finding that with respect to Shri Avinash Wadhwan assessee has provided his bank statement, income tax return, statement of affairs and, therefore, the identity of Shri Avinash Wadhwan cannot be doubted. The Ld. CIT(A) has further given a finding that he had examined the ledger accounts for the last 4 years of Shri Avinash Wadhwan and the books of accounts on various companies in which he had made the investments which reveal that all the investments and loans made by Shri Avinash Wadhwan was made out of last many years and the source of the impugned loan was out of the withdrawal of his loan balance outstanding in other associated companies. He has further given a finding that Shri Avinash Wadhwan being a non-resident Indian, the return of income filed in India reflected only the income which accrued to him in India. He has further given a 26 ITA.No.6470/Del./2018 M/s. VSF Realtors Pvt. Ltd., New Delhi. finding that the perusal of balance sheet of Shri Avinash Wadhwan for financial year 2013-14 depicted the capital account of Rs.20.01 crore loan liability from ICICI Bank Ltd., for Rs.1.08 crores against which he had granted loan and advances amounting to Rs.9.77 crores, investment Rs.9.84 crores. He, therefore, considering the details furnished before him has given a finding that assessee has discharged his onus of proving the identity, creditworthiness and the genuineness of the transaction and thus, no addition could be made under section 68 of the Income Tax Act 1961. Before us no fallacy in the findings of the Ld. CIT(A) is pointed-out by the Revenue. In such circumstances, we find no reason to interfere with the order of the Ld. CIT(A) on this issue and thus, Grounds No.3 of the Revenue is dismissed. 20. Ground No.4 is with respect to deletion of addition of Rs.1,39,05,693/- being interest expenses. 20.1. During the course of assessment proceedings, the A.O. noticed that assessee had claimed interest of Rs.1,39,05,693/- as bank interest and Rs.98,87,190/- as 27 ITA.No.6470/Del./2018 M/s. VSF Realtors Pvt. Ltd., New Delhi. other interest. He also noticed that assessee had advanced money to different parties for booking or purchases of properties and balances of these advances outstanding as on 31st March 2014 were Rs.7,41,53,685/-. The assessee was asked to prove the nexus between the borrowings for which financing charges were paid and the business activities carried out by it. 20.2. The assessee inter-alia, submitted that the assessee had paid interest amounting to Rs.93,74,077/- on loan taken from M/s. Samara Auto Max Private Limited and Rs.1,44,16,341/- on the overdraft loan taken from Punjab and Sind Bank. It was further submitted that the loan from M/s. Samara Auto Max Private Limited was taken for purchase of shop at Vasant Kunj Mahal and the overdraft facility from Punjab and Sind Bank was taken against the security on fixed deposit. It was further submitted that the loan was for the purpose of business. The submissions of the assessee were not found acceptable to A.O. The A.O. noted that the assessee had utilized the aggregate loan amounting to Rs.14.53 crores for giving advance for 28 ITA.No.6470/Del./2018 M/s. VSF Realtors Pvt. Ltd., New Delhi. purchase of shops, for which, no possession has been received by assessee till date. He noted that since assessee was in the business of renting out of property and no rent has been generated out of these properties for which capital advance has been given, therefore, the interest payment amounting to Rs.1,39,05,693/- as revenue expenditure cannot be allowed as it was capital in nature. The A.O. accordingly disallowed the interest of Rs.1,39,05,693/-. 20.3. Aggrieved by the order of the A.O. the assessee carried the matter in appeal before the Ld. CIT(A) who deleted the addition. 21. Aggrieved by the order of the Ld. CIT(A) the Revenue is now in appeal. 22. Before us the Ld. D.R. supported the order of the A.O. 23. On the other hand, the Learned A.R. reiterated the submissions made before the A.O. and the Ld. CIT(A) and supported the order of the Ld. CIT(A). 29 ITA.No.6470/Del./2018 M/s. VSF Realtors Pvt. Ltd., New Delhi. 24. We have considered the rival submissions and perused the material on record. The issue in the present ground is with respect to the disallowance of interest expenses holding it to be capital in nature. We find that Ld. CIT(A) while deleting the addition has given a finding that the business of the assessee is in trading in real estate and renting the properties since 1996 and the funds obtained through overdraft as working capital or through unsecured loan was deployed for the purpose of business and extending the advances for booking of property's was in the line of its business activity and that mere non-recognition of rental income cannot be the basis for allowing expenditure when the utilisation of fund is established for business purposes. He further noted that on identical facts in assessee’s own case for the A.Y. 2012-13, the Ld. CIT(A) had deleted the addition. He noted that since there are no change no change in the facts and circumstances of the case as compared to A.Y. 2012-13, he, following the order of his predecessor for the A.Y. 2012-13 deleted the addition made by the A.O. Before us no fallacy in the findings of 30 ITA.No.6470/Del./2018 M/s. VSF Realtors Pvt. Ltd., New Delhi. CIT(A) has been pointed out by the Revenue. In such a situation we find no reason to interfere with the order of CIT(A). Thus, Ground No.4 of the Revenue is dismissed. 25. In the result appeal of the Revenue is dismissed and Cross Objection of the assessee is allowed. Order pronounced in the open Court on 31.03.2022. Sd/- Sd/- (N.K. CHOUDHARY) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER Delhi, Dated 31 st March, 2022 VBP/- Copy to 1. The appellant 2. The respondent 3. CIT(A) concerned 4. CIT concerned 5. D.R. ITAT ‘F’ Bench, Delhi 6. Guard File. // By Order // Assistant Registrar : ITAT Delhi Benches : Delhi.