ORDER
R.S. Syal, A.M.
1. This appeal by the assessee is directed against the order passed by the CIT(A) on 8th Jan., 1995 in relation to asst. yr. 1994-95. It is a recalled matter, inasmuch as the earlier ex pane order passed by the Bench was recalled vide its later order dt. 16th Aug., 2005.
2. First ground of the assessee’s appeal is against the confirmation of addition of Rs. 30,000 made by the AO under Section 68.
3. Briefly stated, the facts of this case are that the AO made addition of Rs. 6,000 as the credit appearing in the name of Shri Moti Lal, Rs. 6,000 in the credit appearing in the name of Shri Sanjay Kumar and Rs. 18,000 for the credit in the name of Imperial Construction Company. The same was confirmed in the first appeal.
4. At the outset, it was contended by the learned Authorised Representative that he was not arguing against the confirmation of addition on merits. He, however, maintained that the benefit of telescoping be allowed to the assessee. In the opposition, the learned Departmental Representative relied on the impugned order.
5. Having heard the rival submissions and perused the relevant material on record, it is observed that the AO made trading addition of Rs. 21,600, which was reduced in the first appeal to Rs. 10,000. The Hon’ble jurisdictional High Court in the case of CIT v. Tyaryamal Bal Chand (1987) 165 ITR 453 (Raj) has held that the assessee can explain that the suppressed profits had been brought in as cash credits and one has to be telescoped into the other resulting only in one addition. Such telescoping was upheld in the case of K.S.M. Guruswamy Nadar & Sons in which it was held that separate addition for bogus cash credits and suppression of profits cannot be sustained and both are to be telescoped and covered into one addition. The Jodhpur Bench of the Tribunal in Rameshwar Lal Soni v. Asstt. CIT (2004) 85 TTJ (Jd)(TM) 553 : (2004) 91 ITD 301 (Jd)(TM) has upheld the telescoping. Under these circumstances, we allow the telescoping of the trading addition so finally sustained to the tune of Rs. 10,000 into the addition made under Section 68 to the extent of Rs. 10,000. The other contention of the assessee for telescoping the addition of squared up accounts into cash credit addition does not obviously, merit acceptance, because no intangible addition, unlike trading addition, can be said to have been made, which is to be telescoped into the addition of cash credit. We, therefore, allow benefit of Rs. 10,000 to the assessee on this count.
6. Second ground is against the sustenance of disallowance of interest of Rs. 15,900 to Smt. Usha Devi.
7. The facts of this ground are that the assessee had raised a loan of Rs. 95,000 plus Rs. 16,800 from one Smt. Usha Devi. This amount was utilized for the purchase of shop at 66, Kotwali Road, Sriganganagar, for business purposes. The amount of interest at Rs. 15,900 was claimed as deduction, which was not allowed as the same was not admissible in the opinion of the AO out of income from business. No relief was allowed in the first appeal.
8. Having heard both the sides on the point, it is found as an admitted position that the loan was obtained by the assessee for acquiring a shop in connection with business and the said loan was accepted as genuine. The reason advanced by the AO for disallowance of interest and sustained in the first appeal, is sans merit. When the business is continuing and a loan is raised for acquiring a capital asset, there cannot be any question of capitalizing that interest to the cost of the capital asset. The Hon’ble Gujarat High Court in the case of Dy. CIT v. Core Healthcare Ltd. has accepted the claim of the assessee for deduction of interest under Section 36(1)(iii) after considering Expln. 8 to Section 43(1). Under these circumstances, we are satisfied that the assessee was rightly entitled to deduction.
9. Ground Nos. 3 and 4 were not pressed by the learned Authorised Representative. The same, therefore, stand dismissed.
10. In the result, the appeal of the assessee is partly allowed.