2010 (8) TMI 1034 - AT - Income Tax

Summary

Issues involved:
The judgment involves issues related to disallowance of expenses, computation of capital gains, addition of unexplained cash credits, and addition of unexplained investments.

Disallowance of Expenses:
The CIT(A) confirmed the disallowance on lorry repairs and maintenance expenses. The Tribunal found that the difference in dates on the bills was not serious enough to disallow the expenses. Therefore, the disallowance was deleted, and the Assessing Officer was directed to allow the deduction of &8377; 56,730.

Computation of Capital Gains:
The assessing authority computed capital gains without giving credit for the payment made by the assessee towards outstanding balance. The Tribunal directed the assessing authority to verify the proof of payment and deduct the amount of &8377; 1,44,218 from the computation of capital gains.

Payment of Commission:
The CIT(A) disallowed the payment of commission claimed by the assessee. The Tribunal found the commission amount to be reasonable and customary in real estate transactions, thus deleting the disallowance and directing the assessing authority to allow the deduction for the commission amount.

Addition of Unexplained Cash Credits:
The CIT(A) confirmed the addition of &8377; 8,75,000 under section 68 of the Income-tax Act 1961. The Tribunal noted that while some creditors appeared before the assessing authority, they failed to establish the genuineness of their source of income. The Tribunal confirmed the additions sustained by the CIT(A) with a rider that opening balances in the name of cash creditors for the assessment year should be excluded from the addition.

Addition of Unexplained Investments:
The assessing officer made an addition of &8377; 51,63,458 against unexplained investments, which was partly upheld by the CIT(A). The Tribunal directed the assessing authority to re-compute the capital gains based on the valuation determined by the District Registrar, Shimoga. The assessment was to be modified accordingly.

The appeal filed by the assessee was partly allowed, and the order was pronounced on August 10, 2010, at Bangalore.