9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2015 (10) TMI 2695 - AT - Income TaxAddition on account of short credit in rental income - CIT(A) deleting the addition in violation of Rule 46A of the I. T. Rules - Held that - We find that the total debit transactions shown in the ledger account of Naresh Kumar 27, 67, 094/- which was wrongly bifurcated by the auditor into rent at 23, 50, 621/- and coordination activities at 4, 16, 473/-. Similar debit transactions of the ledger account have been reflected by the auditor as rental receipts. From these documents the assessee has clearly reconciled the discrepancy. Since these documents were not placed before the AO and were placed before the CIT(A) for the first time we are of the considered view that let this issue be examined by the AO and after verifying these documents he will adjudicate the issue. Accordingly this issue of revenue s appeal is set aside to the file of AO. Similar are the facts in AY 2007-08 and details were filed by assessee before CIT(A) for the first time hence for that reason the issue in this year also is set aside to the file of AO. Therefore the issue of both the revenue s appeals is allowed for statistical purposes. Addition made on account of interest paid on loan - CIT(A) deleting the addition in violation of Rule 46A of the I. T. Rules - Held that - We find that the claim of the assessee before CIT(A) was that this interest was paid on account of acquisition of flat at 9/1 Middleton Street on 31.03.2003 from Tata Iron 1 cr. from Standard Chartered Bank and claimed the interest relating to premises as allowable u/s. 36(1)(iii) of the Act since interest paid on asset which is being used as business asset is allowable as deduction. We find that the assessee is unable to bring the documents before the AO during the course of assessment proceedings but he subsequently produced these documents before CIT(A) for the first time and CIT(A) has also not referred these documents to the AO for verification. In terms of the above we are of the view that the interest is paid for acquisition of business asset and the same is allowable but subject to verification of the AO. Accordingly this issue is also set aside to the file of AO for verification. Therefore this issue of both the revenue s appeal is allowed for statistical purposes. Disallowance on account of depreciation on house property - property was not put to use during the year - Held that - Before us it was explained that the mode of computation of depreciation allowable under the Act had been shifted to Block of assets concept whereby the identity of an individual asset is completely lost. Now all assets having same classification and rate of depreciation would be clubbed together and the depreciation is to be computed on the entire block without distinguishing the same with reference to actual use It may so happen that the asset may be in use but the value may be NIL for reason that it s WDV is adjusted against the sale proceeds. Thus there is no provision in the Act which discriminates the allowability of depreciation on fixed assets on the basis of its use or any restriction had been provided in the statute as in the case of section 37(4); which has been deleted. Accordingly we are of the view that the depreciation cannot be disallowed. Deemed dividend addition u/s 2(22)(e) - Held that - We find that admittedly Naresh Kumar & Co. Pvt. Ltd. has not given any loan to the assessee company even otherwise the balance arose due to transaction of purchase and sale of shares between assessee and Naresh Kumar & Co. Pvt. Ltd. No money has been advanced by Naresh Kumar & Co. Pvt. Ltd. to assessee. From the shareholding pattern it is also clear that the assessee is not a shareholder in Naresh Kumar & Co. Pvt. Ltd. which is the primary requirement for treating any loan as deemed dividend u/s. 2(22)(e) of the Act.
Issues Involved:
1. Deletion of addition on account of short credit in rental income by admitting new evidence in violation of Rule 46A. 2. Deletion of addition made on account of interest paid on loan by admitting new evidence in violation of Rule 46A. 3. Deletion of disallowance of depreciation on house property. 4. Deletion of addition under section 2(22)(e) of the Income-tax Act, 1961. Issue-wise Detailed Analysis: 1. Deletion of Addition on Account of Short Credit in Rental Income: The revenue challenged the CIT(A)'s decision to delete the addition of Rs. 27,59,634 for AY 2006-07 and Rs. 2,40,000 for AY 2007-08 on account of short credit in rental income. The AO had noted discrepancies in rental income disclosed by the assessee and made additions accordingly. The CIT(A) deleted the additions, citing erroneous reflection and reimbursement of rent in the Notes on Accounts. However, the Tribunal found that the documents submitted by the assessee for the first time before the CIT(A) were not referred to the AO for verification. Therefore, the issue was remanded back to the AO for verification of the documents. This issue was allowed for statistical purposes. 2. Deletion of Addition Made on Account of Interest Paid on Loan: The revenue contested the CIT(A)'s deletion of the addition of Rs. 4,64,542 for AY 2006-07 and Rs. 4,59,275 for AY 2007-08 made on account of interest paid on loan. The AO disallowed the interest payment due to lack of cooperation from the assessee in establishing the nexus between the payment and receipt of interest. The CIT(A) allowed the claim, stating that the interest was related to the acquisition of a business asset. However, since the documents were presented for the first time before the CIT(A) and not verified by the AO, the Tribunal remanded the issue back to the AO for verification. This issue was also allowed for statistical purposes. 3. Deletion of Disallowance of Depreciation on House Property: The revenue appealed against the CIT(A)'s decision to delete the disallowance of Rs. 12,11,485 for AY 2006-07 and Rs. 11,00,756 for AY 2007-08 made on account of depreciation on house property. The AO disallowed the depreciation, arguing that the property was not used for business purposes during the year. The CIT(A) allowed the depreciation, citing that the company was in continuous business and relied on the decision of the Hon'ble Calcutta High Court in the case of CIT Vs. Ganga Properties Pvt. Ltd. The Tribunal upheld the CIT(A)'s decision, noting that the asset was part of the block of assets and depreciation cannot be disallowed. This issue was dismissed. 4. Deletion of Addition Under Section 2(22)(e): The revenue challenged the CIT(A)'s deletion of the addition of Rs. 7,60,00,000 under section 2(22)(e) for AY 2007-08. The AO had treated the loan transaction with M/s. Naresh Kumar & Co. Pvt. Ltd. as deemed dividend. The CIT(A) deleted the addition, observing that the amount was not an advance or loan but arose from the transaction of purchase and sale of shares. The CIT(A) also noted that the requirements of section 2(22)(e) were not met, and the transaction was interest-bearing, relying on the decision of the Calcutta High Court in the case of Pradip Kumar Malhotra Vs. CIT. The Tribunal upheld the CIT(A)'s decision, confirming that the assessee was not a shareholder in M/s. Naresh Kumar & Co. Pvt. Ltd., and thus, the provisions of section 2(22)(e) were not applicable. This issue was dismissed. Conclusion: The appeals of the revenue were partly allowed for statistical purposes, with issues 1 and 2 remanded back to the AO for verification, and issues 3 and 4 dismissed.
|
