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2016 (3) TMI 1021 - AT - Income TaxAddition made u/s.69B on account of difference in valuation - addition on the basis of the valuation report - Held that - We find in the instant case the addition has been made by the AO mainly based on the valuation report of the DVO. The Hon ble Delhi High Court in the case of Punnet Sabharwal (2010 (12) TMI 846 - Delhi High Court ) has held that addition to income based solely on report of DVO is not valid in absence of any evidence of understatement of consideration. There is no other material available with the revenue to show that assessee has paid anything more than what has been stated. Since the Ld.CIT(A) has given a factual finding that the price paid by the assessee for Flat No.7 is more than the price paid by another purchaser being Flat No.201 in the same building and since the addition has been made by the AO only on the basis of the valuation report of the DVO, therefore, in absence of any contrary material/evidence brought before us by the revenue authorities that the assessee has paid anything beyond whatever has been disclosed we find no infirmity in the order of the CIT(A) deleting the addition - Decided in favour of assessee Deduction u/s 80IA(4)(i) in respect of profit earned by the assessee from development of infrastructure facilities - Held that - We find merit in the submission of the Ld. Counsel for the assessee that netting of interest should be allowed for computation of deduction u/s.80IA in the light of the ratio of the decision of Hon ble Supreme Court in the case of ACG Associated Capitals Vs. CIT 2012 (2) TMI 101 - SUPREME COURT OF INDIA . We accordingly set aside the order of the CIT(A) and direct the AO to recompute the deduction u/s.80IA by netting the interest.- Decided in favour of assessee Deduction on account of proportionate interest on diversion of funds for non business purposes - CIT(A) allowed the claim - Held that - The factual finding given by the CIT(A) that the advances were made to the sub contractors namely Sunil Construction and Ashok Chipre since 2001-02 and 2002-03 and therefore disallowance, if any, could have been made in those years and not in this year also could not be controverted by the Ld. DR. Further the finding given by the Ld.CIT(A) that the own capital and free reserves of the assessee company is much higher than the amount of advances given and no interest bearing funds were utilized to carry the load of these advances in the future years also could not be controverted by the Ld. Departmental Representative. In view of the above and in view of the detailed reasoning given by Ld.CIT(A) while deleting the addition and in absence of any contrary material brought to our notice by the Ld. Departmental Representative we do not find any infirmity in the order of Ld.CIT(A). Accordingly, we uphold the order of the CIT(A) on this issue.- Decided in favour of assessee Deduction on account of Pooja Expenses - CIT(A) allowed the claim - Held that - In our opinion the expenditure incurred in Pooja could not be treated as expenditure wholly and exclusively for the purpose of business or profession of a company and the assessee could not be allowed any deduction u/s.37(1) of the Act towards such expenditure. For the above proposition, we find support from the decision of Hon ble Bombay High Court in the case of Kolhapur Sugar Mills Vs. CIT 1977 (8) TMI 19 - BOMBAY High Court wherein it has been held that expenses incurred for Pooja is not an allowable deduction. - Decided against assessee Assessee also entitled to deduction u/s.80IA(4) on the additional income Addition on Unexplained expenditure - Held that - Various expenses incurred on hotel, gold purchases, plywood purchase, mobile bills of Naveen, Dynapac list etc.. Page no. 4 contains details of expenses incurred by both Mahalaxmi Construction Corporation Ltd. and B T Patil and Sons and the receivable position as on 11/07/2007. The contents on page no. 5 arc details of various expenses including those which are written as K expenses. The total of K expenses is ₹ 26,13,500/- which is incurred on various dates between 26/12/2008 to 24/01/2009. Page no. 7 contains working of interest payment on purchase of tender documents, bank guarantees for EMDs, FDs to be kept for EMDs and EMDs required for procuring mobilization advances. It appears that this is a working or estimate of money required by Mahalaxmi Construction Corporation Ltd. and B T Patil and Sons for giving various bank guarantees and meeting EMD requirements. In fact, the word official is also mentioned against these workings. In my opinion, the contents of page 7 do not reflect the unaccounted expenses of the appellant and the assessing officer is directed to reduce this sum from the total for assessment year 2010-11 and thereafter work out the expenses incurred on the basis of these papers as additional income of the assessee. - Decided in favour of assessee
Issues Involved:
1. Deletion of addition made under Section 69B on account of difference in valuation. 2. Shifting of undisclosed income to earlier assessment years. 3. Deduction under Section 80IA(4) on additional income declared during search proceedings. 4. Disallowance of proportionate interest on advances for non-business purposes. 5. Addition on account of unexplained money under Section 69A. 6. Deduction under Section 80IA(4) on interest income from bank guarantee deposits. 7. Disallowance of pooja expenses. 8. Levy of interest under Section 234A. Issue-Wise Detailed Analysis: 1. Deletion of Addition under Section 69B: The AO made an addition of Rs. 4,15,196/- under Section 69B due to a difference in property valuation. The CIT(A) deleted the addition, noting that the DVO's valuation was based on arbitrary methods and not on comparable rates in the same building. The Tribunal upheld the CIT(A)'s decision, finding no contrary evidence from the Revenue to show that the assessee paid more than disclosed. 2. Shifting of Undisclosed Income: The AO shifted undisclosed income from AYs 2009-10 and 2010-11 to earlier years based on seized documents from a third party. The CIT(A) upheld this, emphasizing the evidentiary value of the documents seized from the joint venture partner. The Tribunal agreed, stating that the seized documents and statements provided sufficient evidence to support the AO's decision. 3. Deduction under Section 80IA(4) on Additional Income: The AO disallowed the deduction under Section 80IA(4) on additional income declared during search proceedings, arguing it was not business income. The CIT(A) allowed the deduction, referencing judicial precedents that support deductions on enhanced income due to disallowed non-genuine expenditure. The Tribunal upheld this, citing decisions that permit deductions under Chapter VI-A on additions to income. 4. Disallowance of Proportionate Interest: The AO disallowed interest on advances for non-business purposes. The CIT(A) deleted the disallowance, noting that the advances were made from the assessee's own funds, not borrowed funds. The Tribunal upheld the CIT(A)'s decision, finding no evidence from the Revenue to contradict the assessee's claim of sufficient own funds. 5. Addition on Account of Unexplained Money: The AO added Rs. 4,95,00,000/- as unexplained money under Section 69A. The CIT(A) directed the AO to rework the source and application of funds and tax any unexplained cash found. The Tribunal upheld this directive, finding it reasonable and supported by the evidence. 6. Deduction under Section 80IA(4) on Interest Income: The CIT(A) disallowed the deduction under Section 80IA(4) on interest income from bank guarantee deposits. The Tribunal allowed the deduction, directing the AO to recompute the deduction by netting the interest, in line with judicial precedents. 7. Disallowance of Pooja Expenses: The AO disallowed pooja expenses, which the CIT(A) allowed, considering them customary business expenses. The Tribunal reversed the CIT(A)'s decision, citing judicial precedents that such expenses are not allowable under Section 37(1). 8. Levy of Interest under Section 234A: The AO levied interest under Section 234A from the due date under Section 139(1). The CIT(A) upheld this. The Tribunal reversed the decision, following judicial precedents that interest under Section 234A should be charged from the date of expiry of the notice period under Section 153A. Conclusion: The Tribunal's decisions largely upheld the CIT(A)'s findings, except for the disallowance of pooja expenses and the levy of interest under Section 234A. The Tribunal emphasized the importance of evidence and judicial precedents in determining the allowability of deductions and the treatment of undisclosed income.
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