2015 (12) TMI 609 - AT - Income Tax

Disallowance of deduction u/s 54EC - as per certificate issued by Rural Electrification Corporation Limited (RECL) the deposit was beyond the prescribed period - CIT(A) deleted the addition as the deposit was made by the assessee within the prescribed time and delay was on account of issue of bond by the RECL - Held that - We entirely agree with the order of the CIT(A). Admittedly, the assessee deposited the money in time with the REC Ltd. However, it was REC Ltd who took time to issue the certificate of the bond. The responsibility of the assessee is to make investment with REC Ltd within time, which was admittedly made. The assessee has no control over the issue of the certificate by the REC Ltd. In view of above, we do not find any justification to interfere with the order of the CIT(A) in this regard and the same is sustained. - Decided against revenue Addition on low household withdrawals - CIT(A) deleted the addition - Held that - Withdrawal of ₹ 10,000/- per month for house-hold expenditure cannot be said to be adequate or reasonable withdrawal, though the estimate by the Assessing Officer at ₹ 1,00,000/- per month is also excessive. In our opinion, it would meet the ends of justice if the house-hold expenditure is estimated at ₹ 25,000/- per month, i.e., ₹ 3,00,000/- per annum. Therefore, after considering the withdrawal of ₹ 1,20,000/- per month, the addition is sustained at ₹ 1,80,000/-. There was no res adjudicata for the Assessing Officer for considering the reasonableness for the house-hold expenditure in this year. It was also contended by the ld. Counsel that the Assessing Officer made the addition merely on the basis of estimate. In our opinion, when no day to day details of expenditure of the house-hold is maintained by the assessee, then naturally by the very nature of the expenditure it has to be determined on estimate basis. Accordingly, we partly reverse the order of the CIT(A) in this regard and sustain the addition of ₹ 1,80,000/- for low withdrawal of house-hold expenditure. - Decided in favour of revenue in part Addition on account of difference of the amount of sale consideration in respect of sale of land by the assessee - CIT(A) deleted the addition - Held that -As per section 48, capital gain is to be computed on the full value of the consideration received or accrued as a result of transfer of the capital asset. Admittedly, the full value of the consideration accrued was ₹ 32,00,000/-. Payment to Ms. Maya Garg, Proprietor of Shree Balaji Trading Co. was given as per the desire of the assessee. That, merely because the assessee could receive only the part money from Ms. Maya Garg would be no ground for reducing the full value of the consideration for the purpose of section 48. We, therefore, reverse the order of the CIT(A) in this regard and restore that of Assessing Officer. - Decided in favour of revenue

Summary

Issues:
1. Disallowance of deduction u/s 54EC of the I.T. Act, 1961.
2. Estimation of house-hold withdrawals for taxation purposes.
3. Difference in the amount of sale consideration in the sale of land.

Disallowed Deduction u/s 54EC:
The Revenue appealed against the deletion of a &8377;16 lakh addition made by disallowing deduction u/s 54EC. The Assessing Officer denied the deduction as per Rural Electrification Corporation Limited's certificate, stating the deposit was beyond the prescribed period. However, the CIT(A) ruled in favor of the assessee, emphasizing that the deposit was made within the stipulated time, and the delay was due to REC's bond issuance. The tribunal concurred with the CIT(A), noting the assessee's timely deposit with REC and lack of control over bond certificate issuance, thus upholding the CIT(A)'s decision.

Estimation of House-hold Withdrawals:
The Revenue contested the deletion of an &8377;11 lakh addition based on estimating the assessee's house-hold withdrawals. The Assessing Officer found the disclosed &8377;1,20,000 inadequate and added &8377;11,00,000. The CIT(A) removed the addition. The tribunal found &8377;10,000 monthly withdrawal insufficient but deemed the AO's &8377;1,00,000 excessive. Estimating &8377;25,000 monthly as reasonable, the tribunal sustained an addition of &8377;1,80,000. It rejected arguments regarding previous year's withdrawals and upheld the addition based on estimation due to lack of detailed expenditure records.

Difference in Sale Consideration:
The Revenue challenged the deletion of a &8377;2 lakh addition by the AO for a sale of land discrepancy. The assessee claimed receiving &8377;30,00,000 from Ms. Maya Garg, while the full consideration was &8377;32,00,000 as per the sale deed. The tribunal held that the full consideration was &8377;32,00,000, and receiving only part from Ms. Maya Garg did not justify reducing the consideration. Consequently, the tribunal reversed the CIT(A)'s decision and reinstated the AO's order, allowing the Revenue's appeal partially.

In conclusion, the tribunal partially allowed the Revenue's appeal, upholding the disallowed deduction u/s 54EC, sustaining an addition for house-hold withdrawals estimation, and reversing the deletion of an addition for a sale consideration difference.