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TMI Blog2012 (9) TMI 696X X X X Extracts X X X X X X X X Extracts X X X X ..... d and some booking deposits were received in cash. Before CIT (A) the copy of registered sale deed showing names, addresses, attested photographs, signatures etc., of the members were filed which proves the identity and genuineness of the depositors - in favour of assessee. Disallowance of non-agricultural use conversion Charges - payment maid after the year end and was paid by the Seller Trust - CIT(A) allowed it - Held that:- CIT (A) has given a finding that assessee maintains its books on mercantile basis which obliges it to make provision for all known liabilities, the expenses have been incurred wholly for the purpose of business and the full sale price has been offered to tax and as per the development agreement the assessee is entitled to deduction. These facts have not been controverted by the Revenue nor it has brought on record any material to the contrary - in favour of assessee. Disallowance of interest paid to partners - Held that:- Since the ground of addition of capital of Rs.9.5 lacs is deleted, the disallowance with respect to interest on the capital also does not survive - in favour of assessee. Disallowance on account of Puran expenses (land filling) - H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .O. noticed that neither the balance sheet nor capital account indicated entry of Rs.5 lac for introduction of capital. According to A.O. though the assessee proved the identity but failed to prove the capacity and genuineness of transaction. In case of Shafibhai, neither balance sheet nor capital account, nor bank account was made available. According to A.O., the assessee proved identity but failed to prove capacity and genuineness of transaction. He accordingly made total addition of Rs.9.5 lacs u/s. 68. Since addition was made u/s.68, he also disallowed interest on capital of Rs. 36,750/- paid to the two partners. Assessee carried the matter in appeal before CIT (A). 5 CIT (A), after considering the submissions of the assessee directed the A.O. to delete the addition of Rs.9,50,000/- by holding as under:- 4.3 I have considered facts of the case and submissions of the A.R. carefully. I am in agreement with the A.R. that facts of the case are covered by the ratio laid down by Punjab Haryana High Court M.P. High Court in the judgments relied upon by him wherein it has been held that even if the explanation of the appellant for source of capital brought by the partner is r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that addition u/s. 68 of Rs.9.5 lacs being the capital contribution by the partners was made in the hands of the firm for the reason that the firm could prove the identity but could not prove the capacity and genuineness of transaction. While deleting the addition made by A.O., CIT (A) has given a finding that the capital was brought by cheques, both the partners were assessed to tax and the assessee has discharged the primary onus in respect of such amount shown in the capital account. The Revenue before us has not been in a position to controvert the findings of CIT (A) nor could it bring any material to the contrary on record. In view of these facts, we are of the view that no interference is called to the order of Ld. CIT (A). Since the ground of addition of capital of Rs.9.5 lacs is deleted, the fourth ground with respect to interest on the capital also does not survive. Accordingly ground No.1 and 4 of the Revenue are rejected. 10. The second ground of appeal relates to the addition of Rs.17,71,900/- made on account of booking deposit u/s. 68 of the Act. 11. The A.O. has made addition of Rs.17,71,900/- on account of booking deposits received from 18 members and added it a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bers are low income group from Muslim locality considering booking amount received, size of plot, number of plots etc. The sale price or purchase price is not below State Government guidelines index value. Even a part of the scheme land is still unsold as submitted by the Ld. A.R. In the circumstances I am of the opinion that the booking deposits in the facts of the case as clarified by the appellant are explained and accordingly the A.O. is directed to delete this addition of Rs.17,71,900/-. This ground of appeal is therefore, hereby allowed. 13. Against the deletion of Rs.17,71,900/- by CIT (A), the Revenue is in appeal before us. 14. Before us the Ld. D.R. submitted that the deposit of Rs.17,71,900/- has been received in cash from 18 depositors. The assessee has returned the deposit aggregating to Rs.4 lacs in the case of 4 depositors. Since the 4 depositors were refunded the amount and sale deed was not executed the addition u/s. 68 be at least sustained in these 4 cases. On the other hand, the Ld. A.R. relied on the order of CIT (A). 15. We have heard rival contentions, perused the material on record. The undisputed facts are that the assessee had received the booking de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n stands in the name of the Trust and hence not admissible. Even otherwise in such cases substance of expenses incurred has to be examined. The expenses have been incurred wholly for the purpose of the business. The full sales price has been offered to tax. In view of facts of the case and as per development agreement the appellant is entitled to aforesaid deduction. The A.O. is therefore, directed to allow the expenses of Rs.1,80,925/-.This ground of appeal is, therefore, hereby allowed. 19. Against the above order of the CIT (A), the Revenue is now in appeal before us. 20. Before us the Ld. D.R. relied on the order of A.O. Whereas the Ld. A.R. relied on the order of CIT (A). 21. We have heard the rival contentions, perused the material on record. The factual position is that Non Agricultural (NA) use conversion charges of Rs.6,10,080/- was paid on 29-4-2006.The assessee has claimed prorate NA charges of Rs.1,80,925/- in respect of total land area sold during the year. The reason for disallowance by A.O. was that it was paid after the year end and was paid by the Seller Trust. CIT (A) has given a finding that assessee maintains its books on mercantile basis which obliges it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s sale price has been credited and offered to tax during the relevant previous year. However, the appellant himself has estimated this expenditure at lump sum Rs.150/- per sq. yd. which according to him is most reasonable. The appellant has submitted that there is still about 4000 sq. yd of plot area which is unsold at present. From the facts of the present case, it is seen that the Apex Court has also expected assessing authority to estimate if necessary reasonableness of such unfinished work expenses which could be spread over a period of time. The A.O. has disallowed these expenses on some different ground which does not stand legal test and relevant for the previous year. At the stage puran expenses are not fully verifiable from the records and in any case Rs.150 per sq. yd. is an estimate made by the appellant. Looking to all the circumstances, nature of business etc., and in order to meet the end of justice, I estimate and uphold the addition to the extent of Rs.1,63,832/- i.e. 15% of such expenses claimed and direct the A.O. to allow relief in respect of balance disallowance of Rs.9,21,718/- as regards this ground. This ground is thus partly allowed. 25. Against the afo ..... 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