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2022 (10) TMI 837 - AT - Income TaxInterest income declared by the assessee is less than the amount of interest shown as per 26AS statement - Income which is claimed to be belong to sister concern - HELD THAT - We find the ld.CIT(A) sustained the addition in absence of any satisfactory explanation given by the assessee. It is the submission of the ld.counsel for the assessee that the amount of interest received from Canara bank belongs to the sister concern of the assessee whose name is somewhat similar with that of the assessee and the assessee does not have any bank account with the Canara bank. It is also his submission that given an opportunity, assessee is in a position to substantiate with evidence to the satisfaction of the AO that such interest income which belongs to the sister concern of the assessee has in fact been offered by them to taxation. We deem it proper to restore this issue to the file of the AO with a direction go grant an opportunity to the assessee to substantiate its case and decide the issue as per fact and law. The first issue raised by the assessee in grounds of appeal is accordingly allowed for statistical purpose. Expenditure incurred towards land development - HELD THAT - Although the assessee has claimed such land development expenditure for the AY 2014-15, no such disallowance has been made in the order passed/s. 143(3)/153A. Similarly for AY 2015-16, although the assessee has claimed such expenses however, the AO in the order passed u/s. 143(3) r.w.s 153A has not made any disallowance. Considering the totality of the facts of the case and following the decision of the Tribunal in assessees own case for AY 2013-14 2020 (7) TMI 40 - ITAT HYDERABAD we direct the AO to restrict such disallowance to 10% of the expenses claimed. The grounds raised by the assessee on this issue is accordingly partly allowed.
Issues:
1. Addition of Rs.52,150 towards difference in interest income between P&L account and 26AS. 2. Addition of Rs.1 crore towards land development expenditure. Analysis: Issue 1: The appeal challenged the addition of Rs.52,150 to the total income of the assessee due to a difference in interest income between the P&L account and 26AS statement. The AO made the addition as the interest income declared was less than the amount in the 26AS statement. The ld.CIT(A) upheld the addition as no satisfactory explanation was provided by the assessee. The counsel for the assessee argued that the interest income belonged to a sister concern and not the assessee. The Tribunal decided to restore the issue to the AO for verification based on the submissions and evidence that the interest income belonged to the sister concern, allowing the appeal for statistical purposes. Issue 2: The second issue concerned the addition of Rs.1 crore towards land development expenditure. The AO made the addition as the assessee failed to substantiate the claim with evidence. The ld.CIT(A) upheld the addition. The counsel for the assessee referred to previous years' assessments where disallowances were restricted to 10% based on Tribunal decisions. The Tribunal found merit in the argument and directed the AO to restrict the disallowance to 10% of the claimed expenses, partly allowing the appeal on this issue. In conclusion, the Tribunal partly allowed the appeal, directing the AO to verify the interest income issue and restrict the disallowance of land development expenses to 10% based on previous assessments and Tribunal decisions.
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