2010 (10) TMI 1046 - AT - Income Tax

Summary

Issues Involved:
1. Disallowance of business loss.
2. Partial relief on declared agricultural income.
3. Addition of lease rent as income.

Summary:

Issue 1: Disallowance of Business Loss
The assessee claimed a loss of Rs. 1,17,070 from his proprietorship business, M/s Milk Time Frozen Foods. The Assessing Officer disallowed the loss due to the failure of the assessee to produce books of account, bills, or vouchers. The CIT(A) upheld this decision, noting that the assessee did not provide any reasonable explanation or evidence. The Tribunal agreed with the CIT(A), stating that the lack of evidence justified the disallowance of the claimed loss. Thus, the ground raised by the assessee was dismissed.

Issue 2: Partial Relief on Declared Agricultural Income
The assessee declared agricultural income of Rs. 14,50,000. The Assessing Officer treated this as unexplained income due to the lack of documentary evidence and English translation of land deeds. The CIT(A) allowed only partial relief, estimating agricultural income at Rs. 20,000 per year based on the improbability of earning Rs. 14,50,000 from 10 acres of land. The Tribunal directed the assessee to produce English versions of the sale deeds and justifiable proof of agricultural income and related expenditure. The issue was remanded back to the Assessing Officer for reconsideration, allowing the ground for statistical purposes.

Issue 3: Addition of Lease Rent as Income
The assessee showed lease rent on vehicles given to M/s Milk Specialties Ltd. The Assessing Officer included Rs. 22,99,986 as undisclosed income, which was the margin money and installments paid by the company on behalf of the assessee. The CIT(A) upheld this addition, noting that the payment was an obligation of the assessee met by the company without any obligation to return. The Tribunal agreed, stating that such payments should be treated as income of the assessee. Thus, the ground raised by the assessee was dismissed.

Conclusion:
The appeal of the assessee was partly allowed, with the Tribunal remanding the issue of agricultural income back to the Assessing Officer for reconsideration and upholding the disallowance of business loss and addition of lease rent as income.