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TMI Blog2014 (1) TMI 1394X X X X Extracts X X X X X X X X Extracts X X X X ..... used over the years etc - If the books of accounts are found during the search action, at the impugned flat, that should undisputedly indicate that the premises is of business nature - If the books indicate the depreciable nature of the said premises, by figuring out from the depreciation schedule, the provisions of section 23 becomes irrelevant - The issue has been restored for fresh adjudication. - I.T.A. No. 3392/M/2011 - - - Dated:- 15-1-2014 - Shri D. Karunakara Rao And Dr. S. T. M. Pavalan,JJ. For the Appellant : Shri Devendra Mehta For the Respondent : Shri Pritam Singh, DR ORDER Per D. Karunakara Rao, AM: This appeal filed by the assessee on 28.04.2011 is against the order of CIT (A)-41, Mumbai dated 28.3.2011 for the assessment year 2008-2009. 2. In this appeal, assessee raised the following grounds which read as under: "1.0. the order passed by the CIT (A) partly confirming the assessment order u/s 143(3) of the Act, is both bad in law and bad in facts. 1.1. The AO erred in law as well as in facts in not considering the revised return of income filed by the assessee. 2.0. The Ld CIT (A) erred in confirming the addition of undisclosed income o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... akhs etc. CIT(A) confirmed the said additions. Agreed with the same, the assessee is in appeal before us with the aforementioned grounds. 4. Before us, sri Devendra Mehta, Ld Counsel for the assessee mentioned that the assessee is not interested to press the ground no.1 and 6, therefore the same may be dismissed as not pressed. After hearing the ld DR, the said ground no.1 and 6 are dismissed as not pressed. Similarly, referring to ground 5, Ld counsel demonstrated that the addition of Rs 5,960/- is uncalled for. In this regard, Ld counsel mentioned that the CIT (A) erred in confirming the disallowance of Rs. 5,960/- made by the AO on account of property maintenance expenses without considering the fact that no such expenditure was ever incurred or claimed in the return by the assessee and claimed as a deduction in the P and L account. In doing so, he was not correct in stating that the assessee did not press for the ground of appeal. On perusal of the facts and the orders of the revenue, we find merit in the arguments of Ld Counsel for the assessee. After hearing Ld DR on this issue, we allow the ground 5 of the assessee. Now, we shall take up the rest of the issues raised befor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the addition made by the AO merely based on the estimated Valuation reports of the Government valuers as well as the erroneous valuations and computations. 6. On the other hand, Ld DR for the Revenue filed a summary chart and relied heavily on the orders of the AO and the CIT (A). Ld DR brought to our attention the fact of assessee s admission of Rs 65 lakhs and reiteration of the same by filing a affirmation letter dt 4.2.2008. Further, referring to the impugned order of the CIT(A), Ld DR mentioned that the assessee did not submit the impugned invoice dt 20.7.2004 of M/s Yash Corporation evidence of cost of the solitaire diamond ring is only Rs 13, 64,450/- and not Rs 50.08 lakhs as valued by the Government valuer. 7. During the rebuttal time, Ld Counsel recalled the settled preposition on the issue that the actual investment in the jewellary shall only be added in the year of investment. He fairly mentioned that the matter may be remanded to the files of the AO for proper appreciation of the entries in the relevant WT returns as well as for establishing the bonafide of the said invoice dt 20.7.2004. We cannot comprehend as to how the said invoice is not produced by the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng heard to the assessee. Accordingly, ground no.2 is partly allowed for statistical purposes. 8. Ground no.3 relates to the disallowance u/s 14A of the Act. In this regard, Ld Counsel for the assessee submitted that the assessee earned an exempt income of Rs 12,45,898/-. On noticing that the assessee debited interest expenditure of Rs 14.84 lakhs, AO applied the formula envisaged in the Rule 8 of the IT Rules r w section 14 A of the Act. Assessee s submissions that the assessee had adequate interest funds for investment in the exempt income yielding assets, was not appreciated. AO quantified the disallowance at Rs 2,49,189/- u/s 14A r w r 8D. Relying on the jurisdictional HC Judgment in the case of Godrej Boyce Man. Co Ltd 328 ITR 81, CIT(A) confirmed the said disallowance. 9. Before us, Ld Counsel filed various documents to suggest that the assessee maintains mixed funds and non interest bearing funds are invested in the said investments which yielded the impugned exempt income . He mentioned that assessee has not incurred any expenditure for earning the said exempt income . Further, he asserted that the assessee has adequate funds in the system to explain the investments ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore , provisions of section 23 of the Act is required to be invoked and the ALV needs to be computed. AO accordingly, adopted monthly rent of Rs 25,000/-. During the first appellate proceedings, assessee reiterated the above submissions. In addition, assessee submitted that the monthly rent of sum of Rs 25,000/- is on high side. Assessee pleaded for ratable value of Rs 78,024/- which is arrived at based on the municipal taxes of Rs 14,040/- paid in relation to the said house property. CIT(A) approved the AO s decision and ignored the submissions made without prejudice.AR relied on various decisions of the Tribunal and the Higher judiciary to support the arguments. On the other hand, Ld DR relied on the order of the AO. 12. We have heard both the parties on this issue of ALV of the flat determined on estimation basis. On hearing both sides, we are of the considered opinion that the matter should be remanded to the files of the AO for detailed examination. AO needs to examine when the asset was acquired by the assessee, how the asset is reflected in the books of accounts for all the years, how the asset is being used over the years etc. AO needs to consider the facts judiciously ..... X X X X Extracts X X X X X X X X Extracts X X X X
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