9911796707
TMI Blog2005 (12) TMI 448X X X X Extracts X X X X X X X X Extracts X X X X ..... ssing Officer held that the super built-up area of the property is 940 sq. feet. He adopted Rs. 10 per sq.ft. as monthly rent and, accordingly, ALV was determined. Learned CIT(A) held that the estimation by Assessing Officer is not based on any supporting evidence and hence ad hoc estimation is not maintainable. 2.1 Learned DR Shri B. Chattaraj submitted that Nungambakam High Road is a centrally located posh area of Chennai. The ALV declared by assessee is a meager sum of Rs. 60,000. Thus, the adoption of ALV at Rs. 10 per sq.ft. as monthly rent is justified. 2.2 Learned counsel for assessee on the other hand submitted that the property is not a let out property. The annual value adopted by Municipal Corporation is a sum of Rs. 10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eturn is Rs. 71,57,501. He accordingly concluded that rent is a meager sum. The Assessing Officer estimated the monthly lettable value at Rs. 3 per sq.ft. and computed the ALV at Rs. 2,80,8000 after reducing 20 percent for the repairs, the net ALV was adopted at Rs. 2,24,640. The difference between the value so arrived at and the ALV declared by assessee was added to the income. Learned CIT(A) held that the estimation of ALV by Assessing Officer is without any supporting evidence and is a purely ad hoc computation. He accordingly deleted the addition. 3.2 Learned DR submitted that the property is highly valued. The same is let out to one of the sister concern of assessee. Panganur is a town having Taluq Headquarters. Thus, the estimat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accordingly estimated the monthly rent at Rs. 8 per sq. ft. and arrived at the ALV Learned CIT(A) held that since the addition is without any supporting evidence and an ad hoc addition, the same is to be deleted. 4.2 Whereas learned DR relied upon the assessment order, learned counsel for assessee relied upon the appellate order. 4.3 In view of our finding in respect of Chennai Property and Panganur Property above, the addition is to be treated as rightly deleted by learned CIT(A). 5. The next ground of appeal is as under : ( i )The learned CIT(A) erred in allowing an interest of Rs. 33,10,627 to be debited when the same had not been offered and taxed in the hands of the recipient. The learned CIT(A) erred in ignoring the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n taken as income and thus not taxed during the assessment proceedings of assessment year 1998-99. This decision of not taxing the interest on debit balance of the partners has been taken on the basis of first Appellate Order in the case of M/s. Srinivasa Builders for Assessment yrs 1994-95 to 1997-98 which has been accepted by the Department. Therefore, question of allowing this interest as a deduction in the hands of the assessee does not arise and hence the amount of interest claimed as deduction amounting to Rs. 33,10,627 is hereby disallowed". In respect of RBF Nidhi Ltd., the Assessing Officer allowed the interest of Rs. 95,961 out of total interest payment of Rs. 32,95,272. The interest was allowed to the extent interest received b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 22,39,673 from KBDPL and Rs. 9,59,638 from Sapthagiri Enterprises. There is, therefore, nexus between interest earned and interest paid and hence the interest payable to Srinivasa Builders has to be allowed as a deduction. The addition therefore is deleted". In respect of disallowance of Rs. 95,961 out of total interest payment of Rs. 32,95,272. The interest was allowed to the extent interest received by assessee. Balance was disallowed. Learned CIT(A) in respect of interest paid to RBF Nidhi Ltd. etc. held as under : "Regarding part addition of interest payable to Indus Ind Bank, Pondichery Nidhi and RBF Nidhi Ltd., the total interest outgo is Rs. 32,95,272 against total receipt of interest of Rs. 31,99,311. The Assessing Officer h ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
