2017 (1) TMI 1191 - HC - Income Tax

Addition u/s 69 made on account of investment in purchase of land - Held that - It has come on record that said Mr.Hemendra Ahsh purchased the land situated at Adalaj from power of attorney holder of the original land owners Mr.Gandaji Thakore and others and thereafter said Mr.Hemendra Shah sold the said land to the assessee. There is no iota of evidence on record to suggest that the assessee paid ₹ 2.10 Crores to said Mr.Hemendra Shah. Solely on the basis of statements of the original land owners Mr.Gandaji Thakore and others that they received sale consideration from Mr.Champavat, in whose favour sale deed was executed by them in the year 2008, as rightly held by the learned CIT(A) and the learned tribunal, A.O. was not justified in making addition on account of investment in purchase of land at Adalaj of ₹ 74,50,000/-. We are in complete agreement with the view taken by the learned tribunal in deleting addition made by the A.O. on account of investment in purchase of land at Adalaj of ₹ 74,50,000/-. No substantial question of law arise as proposed.

Summary

Issues:
1. Addition made on account of investment in purchase of land at Adalaj
2. Disallowance of interest
3. Disallowance under section 14A of the Income Tax Act

Analysis:

Issue 1: Addition made on account of investment in purchase of land at Adalaj
The appeals involved a common question of law and facts regarding the addition made on account of investment in the purchase of land at Adalaj for different co-purchasers. The Income Tax Appellate Tribunal had passed an order deleting the addition, which was challenged by the revenue through Tax Appeals. The revenue contended that the original landowners had received a certain amount for the sale of land at Adalaj and the co-purchasers had jointly paid this amount for purchasing the land. However, the tribunal found that the co-purchasers had not directly paid the amount to the original landowners but had purchased the land from an intermediary who had acquired it from the original owners. The tribunal concluded that there was no evidence to support the addition made by the Assessing Officer, leading to the dismissal of the appeals.

Issue 2: Disallowance of interest
Apart from the land purchase issue, there were also disputes regarding the disallowance of interest expenses. The CIT(A) had partly confirmed the disallowance made by the Assessing Officer. However, the tribunal allowed the appeal of the assessee and directed the deletion of a portion of the disallowed interest expenses. The tribunal's decision was based on the lack of justification for the disallowance, leading to the dismissal of the revenue's appeal on this matter.

Issue 3: Disallowance under section 14A of the Income Tax Act
Additionally, there was a disallowance under section 14A of the Income Tax Act, which was also challenged in the appeals. The tribunal's decision to delete the addition made by the Assessing Officer on this account was upheld, as there was insufficient evidence to support the disallowance.

In conclusion, the High Court upheld the tribunal's decision to dismiss the appeals, as there was no substantial question of law arising from the issues raised. The court found that the tribunal had correctly analyzed the facts and evidence, leading to the dismissal of the appeals by the revenue.