2015 (9) TMI 695 - AT - Income Tax

Addition on account of sale of shares of M/s Indian Realty Ltd - AO was of the view that the assessee merely claimed loss on assets and that the transaction was not genuine - CIT(A) deleted the addition - Held that - In the present case it is noticed that the assessee itself disallowed all the expenses claimed in the computation of income. The said expenses also included loss of ₹ 6,75,00,000/- which clearly shows that the assessee had not claimed the loss of the shares in its computation of income and even no loss was carried forward. Therefore the addition made by the AO was without any basis, since the assessee never claimed the expenses or the loss of the share against the income. In that view of matter, we are of the view that the ld. CIT(A) has rightly deleted arbitrary addition made by the AO. We do not see any infirmity in the order of the ld. CIT(A) on this issue. - Decided in favour of assessee. Addition made by the AO u/s 68 - CIT(A) deleted the addition - Held that - In the present case it is noticed that the ld. CIT(A) after verify from the record categorically stated that a sum of ₹ 13,50,000/- was outstanding as on December 2005 as against the said amount a sum of ₹ 5 lac was paid during the year under consideration and the outstanding balance as on 1.4.2008 was ₹ 8,50,000/- which clearly established that the assessee did not receive any amount as a loan from M/s Indian Realtors Pvt. Limited during the year under consideration. In the instant case nothing was brought on record to establish that the amount outstanding as on December 2005 was not genuine therefore, the addition made by the AO for the year under consideration was not justified. Accordingly, we are of the view that the ld. CIT(A) has rightly deleted the impugned addition - Decided in favour of assessee.

Summary

Issues:
1. Deletion of addition of Rs. 6,90,81,532/- made by AO on account of sale of shares of M/s Indian Realty Ltd.
2. Deletion of addition of Rs. 8,50,000/- made by AO under section 68 of the IT Act 1961.

Analysis:

Issue 1:
The Department challenged the deletion of the addition of Rs. 6,90,81,532/- by the AO related to the sale of shares of M/s Indian Realty Ltd. The AO contended that the transaction was not genuine as the name of the company was not printed on the certificates provided by the assessee. However, the assessee argued that the loss was not claimed in the books of account and the addition made by the AO was baseless. The CIT(A) found that the sale of shares was genuine, supported by evidence such as bank statements and PAN of the buyer. The CIT(A) concluded that since the assessee did not claim the loss in its books of account, the addition made by the AO was unjustified. The ITAT upheld the CIT(A)'s decision, stating that the assessee disallowed all expenses in the computation of income, including the loss of shares, indicating that the loss was not claimed against income. Therefore, the ITAT found no basis for the AO's addition and upheld the deletion by the CIT(A).

Issue 2:
The Department raised an issue regarding the deletion of the addition of Rs. 8,50,000/- made by the AO under section 68 of the IT Act 1961. The AO treated the loan from M/s Indian Realtors Pvt. Limited as an unexplained cash credit due to lack of proper documentation. However, the assessee provided details of the loan, including confirmations, addresses, and PAN of the lender. The CIT(A) noted that the loan amount outstanding was properly accounted for, with no new loan received during the relevant year. The CIT(A) found that the assessee had paid off part of the loan during the year, leaving an outstanding balance of Rs. 8,50,000/-, which was not a new loan. The ITAT agreed with the CIT(A) that the loan was genuine and properly documented, and the addition by the AO was unwarranted. Therefore, the ITAT dismissed the Department's appeal, upholding the deletion of the addition.

In conclusion, the ITAT upheld the CIT(A)'s decisions in both issues, dismissing the Department's appeal in its entirety.