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2024 (4) TMI 448 - AT - Income TaxAddition on account of unexplained investment - addition on the basis of market price of the land and building whereas the assessee has declared the value of these assets as per cost incurred by it when the land was purchased in F.Y. 2010-11 - HELD THAT - The basis of the addition is the valuation report submitted by the assessee during the course of assessment proceedings which was based on the market value of land and building as on the date of valuation - purchase price declared by the assessee is the cost incurred by the assessee and, therefore, AO grossly erred in taking market value of the assets from the valuation report. We do not find any reason to interfere with the findings of the CIT(A). Ground stands dismissed. Addition on account of notional rental value - AO found that market value of the constructed property is far more than what has been stated by the assessee and taking 8% as annual rental value as per the agreement, thus made addition - HELD THAT - We find that the assessee has computed its rental income as agreed with the lessee and annual lettable value is also justified using average rent charged in nearby area at Noida. We, therefore, do not find any merit in taking notional rental value on the fair market value of the constructed property. Assessee has accordingly shown 8% rental income in the investment shown in the books of account. We, therefore, decline to interfere with the findings of the ld. CIT(A). Addition on account of sundry creditors - HELD THAT - The only income of the assessee is income from house property. Therefore, there is no question of any sundry creditors/payables. Assessee has not claimed any expenditure. Therefore, there is no question of disallowance of any expenditure. We do not find any error or infirmity in the findings of the ld. CIT(A).
Issues involved:
The appeal by the Revenue against the order of the ld. CIT(A) - 1 New Delhi pertaining to A.Y. 2013-14. Issue 1: Addition made of Rs. 2,98,61,649/- - The Revenue contended that the ld. CIT(A) erred in not justifying the addition made without appreciating all the facts. - The AO had rejected the books of account of the assessee u/s 145(3) of the Income-tax Act, 1961. - The Revenue argued that the AO had made several items of addition and disallowances which were discussed separately in the assessment order. Issue 2: Unexplained investment u/s 69 - The AO made an addition of Rs. 1,65,39,595/- on account of unexplained investment in the construction of building u/s 69. - The ld. CIT(A) deleted this addition without appreciating the facts brought on record by the AO. Issue 3: Notional rental income - The AO made an addition of Rs. 33,41,966/- on account of notional rental income. - The ld. CIT(A) deleted this addition, stating that the assessee had computed its rental income as agreed with the lessee. Issue 4: Unexplained cash credit - The AO made an addition of Rs. 74,74,102/- on account of unexplained cash credit. - The ld. CIT(A) deleted this addition, noting that there was no question of sundry creditors/payables as the only income of the assessee was from house property. In the case, the assessee filed its return of income declaring a loss, which was later assessed at an income after various additions and disallowances. One such addition was on account of unexplained investment, which the AO based on market price rather than the cost incurred by the assessee. The Tribunal held that the purchase price declared by the assessee was the actual cost incurred, dismissing the Revenue's appeal on this ground. Regarding the addition of notional rental income, the AO calculated it based on the market value of the property, whereas the assessee had returned rental income as per the sub-lease deed. The Tribunal found the assessee's computation justified and declined to interfere with the ld. CIT(A)'s decision to delete this addition. Lastly, the addition on account of unexplained cash credit was challenged by the Revenue, but the Tribunal upheld the ld. CIT(A)'s decision as there was no basis for such addition considering the nature of the assessee's income. Consequently, the appeal of the Revenue was dismissed by the Tribunal.
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