9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2016 (3) TMI 1226 - AT - Income TaxDisallowance on account the depreciation claimed on building - Held that - During the course of assessment proceedings for the year 2007-08, the assessee admitted in his letter dated 27.11.2009 that the building in question is a residential house and one floor of which was sold during the year and the proceeds from the sale were invested in construction of other floors of the building. The Assessing Officer disallowed a sum of ₹ 1,09,873/- on account of depreciation claimed on the building in question. There is no evidence on record to show that there was a change in the user of building. It is also clear that the assessee has accepted the order passed by the Income Tax Authorities for the assessment year 2007-08. Considering the entire facts and circumstances of the present case, we do not find any merit in this ground of appeal and accordingly, the same is dismissed. Profit on sale of immovable properties - treated as income from business and profession - estimating the profit on sale of flats @ 30% of the sales value - Held that - A profit rate of 21% will meet the ends of justice in this case. It is relevant to observe here that the assessee failed to give his past tax history. The assessee has also not shown any profit on sale of immovable properties. It is evident from the record that the assessee is executing contract work and is also engaged in the construction of building and selling the same regularly. We may also observe there that the gross profit rate cannot be uniform in all the years and the profit rate depends on many factors. Therefore, the gross profit rate of 21% for the year under consideration should not be guiding factor in other years. Accordingly, we direct the Assessing Officer to apply a profit rate of 21% as against 30% applied by the revenue authorities. The Assessing Officer should give a relief to the assessee accordingly. Addition under section 69C - Held that - The entire expenditure has been routed through the books of account of the assessee and the copy of the building account and copies of the cash book on various dates, on which the expenditure was booked were placed on record as a proof of the source of expenditure in question. The Assessing Officer has accepted the books of account. It is true that the expenditure in question also appears in the Balance Sheet, relevant to assessment year under consideration. In our opinion, the entire expenditure has been booked through the books of account and, therefore, there was no question arises for assessing the same under section 69C of the Act. It appears that the addition has been made just for the sake of making addition and the same is not sustainable in law. Accordingly, we delete the addition of ₹ 5,01,860/- made under section 69C of the Act by the Assessing Officer and confirmed by the learned CIT (Appeals). Addition u/s 68 - Held that - There is no material on record to controvert the above contention of the learned counsel for the assessee. The Revenue has also not proved that the assessee had received more than the sale consideration mentioned in the sale deed and, therefore, on this score also, no addition can be made. Considering the facts and circumstances of the present case, we delete the addition made by the Assessing Officer and confirmed by the learned CIT (Appeals). Addition u/s 68 - Held that - According to the learned counsel for the assessee, this amount was available for depositing in Account No. 09250110004692 with UCO bank, Ram Bazar, Shimla in the name of assessee s minor child Sanchit. There is no evidence on record to controvert the above contention of the learned counsel for the assessee. The amount received on the maturity of FDR was available for making deposits. This is not a case of the Revenue that the amount received on maturity of FDR was invested somewhere else. In the absence of such evidence, there is no reason to disbelieve the version of the assessee. Accordingly, we delete the addition made by the Assessing Officer and confirmed by the learned CIT (Appeals). This ground of appeal stands allowed.
Issues Involved:
1. Disallowance of depreciation on building. 2. Treatment of income from the sale of property as business income. 3. Estimation of profit on sale of flats. 4. Addition under Section 69C for unexplained expenditure. 5. Addition under Section 68 for unexplained cash credits. 6. Addition of income from undisclosed sources. Issue-wise Detailed Analysis: 1. Disallowance of Depreciation on Building: The assessee claimed depreciation of Rs. 64,719 on a building, which was disallowed by the Assessing Officer (AO) on the grounds that the building was not used for business purposes and was earlier admitted by the assessee to be a residential house. The Commissioner of Income Tax (Appeals) [CIT(A)] upheld this disallowance, noting the lack of documentary evidence to support the business use of the building. The Tribunal also dismissed the appeal, agreeing with the lower authorities' findings that there was no change in the use of the building from residential to business purposes. 2. Treatment of Income from Sale of Property as Business Income: The AO treated the income from the sale of property as business income and estimated the profit at 30% of the sales value. The assessee argued that the income should be assessed as capital gains. The Tribunal noted that the AO's estimation lacked consideration of relevant factors such as past tax history, nature of business, and economic conditions. The Tribunal directed the AO to apply a profit rate of 21% instead of 30%, based on a comparable case of a reputed builder in Shimla, M/s Rajdeep Builders, which had a profit rate of 18.22%. 3. Estimation of Profit on Sale of Flats: Similar to the previous issue, the AO estimated a profit rate of 30% on the sale of flats. The Tribunal, applying the same reasoning as in the previous issue, directed the AO to apply a profit rate of 21% instead of 30%. 4. Addition under Section 69C for Unexplained Expenditure: The AO added Rs. 5,01,860 under Section 69C, treating it as unexplained expenditure. The assessee contended that the expenditure was routed through the books of account and reflected in the balance sheet. The Tribunal found merit in the assessee's contention, noting that the expenditure was booked through the books of account and appeared in the balance sheet. Consequently, the Tribunal deleted the addition, stating that the addition was not sustainable in law. 5. Addition under Section 68 for Unexplained Cash Credits: The AO made an addition of Rs. 1,02,102 under Section 68 for unexplained deposits in the assessee's bank account. The CIT(A) confirmed this addition. The Tribunal upheld the addition, noting that the assessee failed to explain the source of the deposits. The Tribunal emphasized that under Section 68, the onus lies on the assessee to prove the genuineness of the transactions, which was not satisfactorily done in this case. 6. Addition of Income from Undisclosed Sources: The AO added Rs. 16,50,000 as income from undisclosed sources based on an agreement to sell a property for Rs. 25,50,000, whereas the actual sale consideration was Rs. 9,00,000. The assessee explained that the property was sold unfinished, leading to a reduced consideration. The Tribunal accepted the assessee's explanation, noting the difference in the nature of the property agreed to be sold and the property actually sold. The Tribunal deleted the addition, stating that the Revenue failed to prove that the assessee received more than the sale consideration mentioned in the sale deed. Separate Judgments: The Tribunal delivered a common order for both appeals (ITA No.1163/Chd/2013 and ITA No.1164/Chd/2013) for the sake of convenience, addressing similar issues in both cases. The Tribunal's detailed reasoning and directions were applied consistently across both appeals. Conclusion: The Tribunal allowed the appeals partly, providing relief to the assessee by directing the AO to apply a lower profit rate and deleting certain additions while upholding others where the assessee failed to provide satisfactory explanations. The Tribunal emphasized the importance of considering relevant factors and providing a rational basis for estimations and additions in assessment proceedings.
|
