2015 (7) TMI 768 - AT - Income Tax

Disallowance of claim u/s 54F - Held that - CIT (A) while rejecting assessee s claim of deduction u/s 54F has relied upon the order passed by him in group cases of Mohd. Aleemunddin and others, which in turn has been set aside by the Coordinate Bench in the order under reference, we consider it appropriate to remit the issue relating to the assessee s claim of deduction u/s 54F to the file of the AO with similar direction. Facts and issues being materially same in A.Y 2008-09, except for the amount of deduction of ₹ 51,00,000/-, following our decision for A.Y 2007-08, we also restore the issue relating to assessee s claim of deduction u/s 54F to the file of the AO for deciding afresh after due opportunity of being heard to the assessee. - Decided in favour of assessee for statistical purposes. Additions representing the advances received - CIT(A) deleted the addition - Held that - No nfirmity in the order of the ld CIT (A). The AO himself admits that the commission amount was received by the assessee in case of transaction with Shri V. Ramachandra Rao in the financial year 1999-2000 and in case of Shri Jagat Singh in financial years 1995-96 to 1997-98. Thus when the amount in question was received long back, we fail to understand how they can be taxed in the impugned A.Y, even assuming that the said transaction ultimately fructified in the impugned A.Y. Even, otherwise also the ld DR apart from making submissions has not brought any material on record to controvert the factual finding of the ld CIT (A) that the transactions for which the assessee received the commission is different from the transaction with DLF. In view of the aforesaid, we do not find any reason to interfere with the order of the ld CIT (A) in deleting the addition of ₹ 11.50 lakhs and ₹ 2,19,000. - Decided against revenue. Addition of commission received from M/s Mali Florex on sale of land - CIT(A) deleted the addition - Held that - Addition of ₹ 2.50 lakhs was made at the hands of the assessee relying upon the statement of Mali Florex that it has paid the amount of ₹ 5.00 lakhs to the assessee and Shri Syed Naseer as commission towards sale of land. Though, the AO had mentioned that the amounts were paid through cheques, but as per discussion made by the ld CIT (A), it appears, that Mali Florex in course of the assessment proceedings stated that the amounts were paid through bearer cheques. As it appears, before making the addition, AO has not made any inquiry to find out whether the cheques were actually encashed by the assessee. Assessee has not only denied of having received the amount in question at the stage of assessment and before the ld CIT (A), it has also submitted that the amount in question is not reflected in the bank account of the assessee. Therefore, the AO having not made any inquiry or brought any material record to prove that the assessee has actually received amount of ₹ 2.50 lakhs, the addition cannot be sustained - Decided in favour of assessee.

Summary

Issues Involved:
1. Disallowance of claim under Section 54F.
2. Deletion of additions representing advances and commissions received.
3. Protective addition of commission received from M/s Mali Florex.

Detailed Analysis:

1. Disallowance of Claim under Section 54F:
Facts:
The assessee claimed a deduction under Section 54F for the construction of a new house property. The AO disallowed this claim due to a lack of evidence supporting the construction expenses. The CIT (A) upheld this disallowance for the same reason.

Arguments:
The assessee argued that the amount received from the sale of land was used for constructing a house. The assessee presented a house plan to substantiate this claim and requested that the matter be remitted back to the AO for fresh consideration, similar to the case of Mohd. Aleemunddin.

Judgment:
The Tribunal found no dispute regarding the nature of the receipt as a transfer of a capital asset. However, the Tribunal noted the lack of evidence for the construction expenses and remitted the issue back to the AO for fresh examination, directing the assessee to provide necessary evidence. This decision was applied to both A.Y 2007-08 and 2008-09.

2. Deletion of Additions Representing Advances and Commissions Received:
Facts:
The AO added Rs. 11.50 lakhs and Rs. 2.19 lakhs to the assessee's income, representing commissions received from Shri V. Ramachandra Rao and Shri Jagat Singh, respectively. The AO argued that these amounts were related to land transactions finalized in the current assessment year.

Arguments:
The assessee contended that these amounts were received in earlier financial years and were related to different transactions, not the current year's sale to DLF Group of companies.

Judgment:
The CIT (A) deleted these additions, stating that the amounts were received in earlier years and related to different transactions. The Tribunal upheld this decision, noting that the AO failed to provide evidence linking these amounts to the current assessment year's transactions.

3. Protective Addition of Commission Received from M/s Mali Florex:
Facts:
The AO made a protective addition of Rs. 2.50 lakhs, allegedly received as commission from M/s Mali Florex for the sale of land to DLF Group of Companies. The assessee denied receiving this amount.

Arguments:
The assessee argued that there was no evidence of receiving such an amount, and the amount was not reflected in the bank account.

Judgment:
The CIT (A) deleted the addition, noting inconsistencies in the AO's findings and the lack of conclusive evidence. The Tribunal upheld this decision, emphasizing the need for concrete proof of the transaction and noting the ITAT's prior deletion of a similar addition in the case of Mali Florex Ltd.

Summary:
- The Tribunal remitted the issue of the Section 54F deduction back to the AO for fresh examination, requiring the assessee to provide evidence of construction expenses.
- The Tribunal upheld the CIT (A)'s deletion of additions related to commissions received in earlier years, as they were not linked to the current year's transactions.
- The Tribunal also upheld the deletion of the protective addition of Rs. 2.50 lakhs from M/s Mali Florex due to a lack of conclusive evidence.

Outcome:
- Assessee's appeals (ITA Nos. 1383 & 1384/Hyd/2010, 1381 & 1382/Hyd/2010) allowed for statistical purposes.
- Departmental appeals (ITA Nos. 1396 & 1395/Hyd/2010) dismissed.