1997 (3) TMI 144 - AT - Income Tax

Summary

Issues Involved:
1. Addition of Rs. 8,49,000 on account of unproved share application money.
2. Addition of Rs. 18,575 on account of unexplained cash credit.
3. Disallowance of Auto Rickshaw commission, donation, and miscellaneous expenses.
4. Additional ground regarding depreciation on hotel building.

Summary:

1. Addition of Rs. 8,49,000 on account of unproved share application money:
The AO added Rs. 8,49,000 to the net loss of the assessee, questioning the genuineness of share application money received from 48 shareholders. The AO doubted the shareholders' financial capability and the correctness of information provided. The Tribunal, however, found that the assessee had provided sufficient evidence, including affidavits and confirmation letters from shareholders, to establish the existence and investment of the shareholders. Citing the Full Bench decision of the Hon'ble Delhi High Court in CIT vs. Sophia Finance Ltd., the Tribunal held that the assessee had discharged its onus of proving the credits. The addition of Rs. 8,49,000 was deleted.

2. Addition of Rs. 18,575 on account of unexplained cash credit:
The AO added Rs. 18,575 as unexplained cash credit in the account of Smt. Meera Devi, questioning her personal savings and the restaurant's profitability. The Tribunal found that Smt. Meera Devi was assessed to income-tax and had affirmed her investment through an affidavit. The Tribunal held that the assessee had discharged the burden of proving the credit, and the addition of Rs. 18,575 was deleted.

3. Disallowance of Auto Rickshaw commission, donation, and miscellaneous expenses:
The AO disallowed Rs. 2,000 out of the claimed Rickshaw commission of Rs. 20,454 due to unverifiability, and also disallowed Rs. 139 as donation and Rs. 200 as miscellaneous expenses. The Tribunal upheld these disallowances, finding no infirmity in the AO's order.

4. Additional ground regarding depreciation on hotel building:
The assessee filed an application u/r 11 of the Income-tax Appellate Tribunal Rules, 1963, claiming depreciation on the hotel building at 33.1/3% as a 'plant' u/s 32 of the IT Act. The Tribunal entertained this additional ground, noting that the factual premises were already on record and it was a legal ground. The Tribunal directed the AO to re-examine the claim, considering relevant judicial decisions, including those of the Hon'ble Calcutta High Court and the Hon'ble Supreme Court, and to decide the issue afresh in accordance with law.

Conclusion:
The assessee's appeal was partly allowed, with deletions of the additions of Rs. 8,49,000 and Rs. 18,575, while upholding the disallowances of Rickshaw commission, donation, and miscellaneous expenses. The additional ground regarding depreciation was remanded to the AO for fresh consideration.