2015 (6) TMI 53 - AT - Income Tax

Disallowance of purchases made from sister concern under sec.40A(2) - Held that - Having gone through the decision of CIT vs. Glaxo Smith Kline Asia (P) Ltd. (2010 (10) TMI 21 - Supreme Court of India ) wherein held that while making disallowance under sec. 40A(2) regarding payment to related concerns, the authorities are ought to examine as to whether there is any loss of revenue in any of the assessment years in question and to find out that the exercise is a revenue neutral exercise then there no interference is called for. Respectfully following this ratio of the decision, we set aside the matter to the file of the Assessing Officer to decide it afresh - Decided in favour of assesse for statistical purposes. Addition on account of proceeds by sale of jewellery - Held that - There is no dispute that Mr. Prince Goel and Mr. Nitin Goel of M/s. Shanti Abhushan Bhandar in their statements recorded by the Assessing Officer have confirmed the claimed sales of jewellery by the assessee to them but the assessee has failed to furnish any satisfactory reply to the observations of the authorities below that on 18.11.2001 i.e. during the course of assessment proceedings for the assessment year 2006-07, assessee had claimed to have inherited 185 gms. of jewellery only from his father but now the assessee is claiming to have actually inherited 1198.77 gms. from his father. The assessee has not been able to rebut the above observation of the authorities below by furnishing any proof regarding inheritance of 1198.77 gms. of jewellery from his father. In absence of such rebuttal by the assessee and keeping in view the totality of facts and circumstances as well as preponderance of the probabilities, we are of the view that the Learned CIT(Appeals) has rightly upheld the addition - Decided against assesse. Addition received by way of sale of plot under sec. 68 - Held that - there is prevailing practice of transfer of such plot allotted by some government authorities/department for some specific purpose without getting it registered in the name of purchaser from the original allottee on the record of such authorities/department but at the same time some agreement is entered into between the seller and purchaser for such transaction. In absence of such evidence, we are of the view that the authorities below have rightly denied the genuineness of the claimed transaction - Decided against assesse. Disallowance of of advance given to Shourya Developers for purchasing of plots - Held that - the genuineness of claimed refund of advance money for purchase of land from Shorya Developers has been denied on the basis that the assessee did not furnish any evidence with regard to the credit entries amounting to ₹ 2,85,000. The Assessing Officer has denied the claimed refund without examining the veracity of the documents filed by the assessee before it as discussed above. We, thus in the interest of justice, set aside the matter back to the file of the Assessing Officer to examine the correctness of the documents filed by the assessee in this regard and decide the issue afresh after affording opportunity of being heard to the assessee. - Decided in favour of assesse for statistical purposes. Disallowance of interest on car loan, vehicle running and maintenance and depreciation - Held that - the Assessing Officer had made disallowance on account of interest on car loan, vehicle running and maintenance as well as deprecation claimed on car @ 25% of the claim on the basis that the assessee had not furnished evidence with regard to the exclusive use of car for business purposes. The Learned CIT(Appeals) has reduced the disallowance by applying 10% of the claimed amount of ₹ 3,75,498 resulting into disallowance of ₹ 37,550 only. We do not find infirmity in the First Appellate Order as in absence of maintenance of proper log book etc. the possibility of personal user of the car cannot be totally ruled out. - Decided against assesse.

Summary

Issues Involved:
1. Disallowance of purchases from sister concern under sec.40A(2)
2. Addition on account of proceeds by sale of jewellery
3. Addition received by way of sale of plot under sec. 68
4. Disallowance of advance given to developers
5. Disallowance of interest on car loan and personal use of car
6. Charging of interest under sec. 234B and 234C

Issue 1 - Disallowance of purchases from sister concern under sec.40A(2):
The assessee challenged the disallowance of purchases made from a sister concern under sec.40A(2) of the Income-tax Act, 1961. The Assessing Officer denied the claim due to lack of evidence regarding market rates and quality differences. The appellate tribunal referred to the decision of the Hon'ble Supreme Court in a similar case and remanded the matter to the Assessing Officer for fresh consideration based on the evidence provided by the assessee.

Issue 2 - Addition on account of proceeds by sale of jewellery:
The Assessing Officer made an addition on account of proceeds from the sale of jewellery, which was upheld by the CIT(A). The assessee provided details and evidence of the sale, including statements from buyers and purchase bills. However, discrepancies in the inheritance of jewellery raised doubts, leading to the rejection of the appeal.

Issue 3 - Addition received by way of sale of plot under sec. 68:
An addition claimed to have been received from the sale of a plot was disallowed under sec. 68 of the Act. The appellate tribunal upheld this decision as the genuineness of the transaction was not adequately established, considering the lack of evidence regarding the identity and creditworthiness of the buyer.

Issue 4 - Disallowance of advance given to developers:
The Assessing Officer disallowed an advance given to developers, which was later received back partially. The tribunal remanded the matter back to the Assessing Officer to re-examine the documents provided by the assessee to verify the genuineness of the transaction.

Issue 5 - Disallowance of interest on car loan and personal use of car:
The disallowance of interest on a car loan and expenses related to vehicle use and maintenance was contested by the assessee. The tribunal upheld the decision of the CIT(A) to reduce the disallowance based on the lack of evidence regarding the exclusive business use of the car, acknowledging the possibility of personal use.

Issue 6 - Charging of interest under sec. 234B and 234C:
The judgment partly allowed the appeal, addressing the general and consequential grounds, including the charging of interest under sec. 234B and 234C of the Income-tax Act, 1961. The decision was pronounced in open court on a specific date.

This detailed analysis covers the various issues raised in the legal judgment, providing insights into the arguments presented, evidence submitted, and the tribunal's decisions on each matter.