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TMI Blog2015 (8) TMI 167X X X X Extracts X X X X X X X X Extracts X X X X ..... t sale consideration. No attempt has been made for verifying the price from the seller of the property. CIT(A) correctly deleted the addition.- Decided against revenue. Unexplained expenditure u/s 69C - CIT(A) deleted addition - Held that:- As regards the other amount of ₹ 3,81,999/-, we find that the assessee made a categorical claim before the authorities that this amount was spent on furniture and fixtures during renovation of building which was recorded in the books of account for the AY 2008-09. This fact has not been denied by the authorities that the assessee, in fact, recorded this amount of ₹ 3,81,999/- in his books of account of M/s NGK Trading Company. Once this amount has been duly recorded in the books of account of a subsequent year and there is no material to indicate that such furniture and fixture was purchased in the year in question, we countenance the action of the ld. CIT(A) in deleting the addition to this extent - Decided against revenue. Addition on account of the interest on loans - CIT(A) deleted addition - Loans advanced to sister concerns, namely, Exotic Fresh Produce Pvt. Ltd., and Narco Exports - Held that:- The assessee charged inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payment of unsecured loans. Even otherwise, the repayment of business loans taken earlier out of the fresh interest bearing funds borrowed by the assessee, cannot be a reason for making any disallowance of interest paid on fresh funds taken as loan.- Decided in favour of assessee. Disallowance u/s 69B - Unaccounted investment in proprieties - Held that:- t is obvious that the assessee instead of separately showing Investments in these four properties has withdrawn the amount from his capital account, which fact was stated before the AO and has remained un controverted. There is hardly any difference in showing investment in properties either by way of separate asset in the balance sheet or by reducing it from the capital account by means of withdrawals. Once an amount is withdrawn from capital account, which is utilized for making an investment, it cannot be brought within the purview of sections 69/69B in any manner.even after making the above investments, which are meant for non-business purpose, the assessee has still credit balance of his capital account in both the proprietorship concerns. It shows that these investments were made by the assessee for non-business purpose by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estment u/s 69 and, further, why a sum of ₹ 3,81,999/- be not added as unexplained expenditure u/s 69C for additions/alterations to the said property, the assessee submitted that besides the above sale consideration of ₹ 34.65 lac, the assessee also paid ₹ 1,76,300/- towards stamp duty, ₹ 30,880/- towards registration fees and ₹ 1,50,000/- towards cost of parking space. As regards the sum of ₹ 3,81,999/-, the assessee submitted that renovation was carried out in the succeeding financial year 2008-09 and the investment/expenditure of ₹ 3,81,999/- was disclosed in the balance sheet of M/s NGK Trading Company. Not convinced with the assessee s submissions, the AO made addition of ₹ 9,39,999/- (Rs.5,85,000/- plus ₹ 3,81,999/-). The ld. CIT(A) ordered for the deletion of these additions. The Revenue is aggrieved against such deletion. 3. We have heard the rival submissions and perused the relevant material on record. It can be observed that the entire addition made by the AO rests on the valuation report of the DVO, who estimated the value of property at ₹ 40.50 lac against the purchase price at ₹ 34,65,000/-. The prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the property by an amount exceeding ₹ 50,000/-, the stamp duty value of such property as exceeded such consideration shall be taxed as Income from other sources. The legislature has brought in section 56(2)(vii)(b) with the sole intention of bringing such under-payment of sale consideration of immovable property to tax. This provision has been enshrined w.e.f. the AY 2014-15 and is not applicable retrospectively to the AY 2008-09 under consideration. Since this provision is prospective and there is no other authentic evidence of the assessee having actually made any investment over and above the declared sale consideration, we are of the considered opinion that the ld. CIT(A) was justified in deleting the addition to the extent of ₹ 5,85,000/-. 4. As regards the other amount of ₹ 3,81,999/-, we find that the assessee made a categorical claim before the authorities that this amount was spent on furniture and fixtures during renovation of building which was recorded in the books of account for the AY 2008-09. This fact has not been denied by the authorities that the assessee, in fact, recorded this amount of ₹ 3,81,999/- in his books of account of M/s NG ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ged interest @ 11% on such amounts which was shown as income in its Profit Loss Account. It is obvious that when interest has been received @ 11% as against payment of interest @ 10% to 11% on the loans taken by the assessee, there can be no question of making any disallowance of interest. 7. The second component is additional payment of ₹ 16,05,662/- made by the assessee for purchase of shop at South City, Gurgaon, which was shown as Investment in the balance sheet of M/s NGK Trading Company. We have gone through the assessee s balance sheet of NGK Trading Company, a copy of which is available at page 5 of the paper book. It can be seen that the assessee made investment of ₹ 16,05,662/- in shop at South City-II, Gurgaon during the year under consideration and the remaining amount of ₹ 10 lac was invested in the preceding year, making the total figure of investment in shop at ₹ 26.05,662 appearing in the balance sheet. The case of the assessee is that this shop was purchased for carrying on business. 8. Section 36(1)(iii) of the Act allows deduction for the amount of interest paid in respect of capital borrowed for the purposes of business or profess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d advances taken by him. As such, there can be no question of making any disallowance of interest towards the use of interest bearing funds for non-business purpose. 10. The next item is cash and bank balance of ₹ 1,50,17,867/- which includes demand drafts in hand amounting to ₹ 51,03,840/-. The very fact that this much cash and bank balance is available with the assessee at the year end, can t be a ground for making any disallowance towards the interest paid on interest bearing loans taken by the assessee for the simple reason that retaining of amount in cash and bank balances does not in any manner indicates the diversion of funds for non-business purpose. It is for the assessee to decide as to how he has to conduct his business by keeping the borrowed funds in cash or otherwise. If loan is taken for business purpose and the loan is still in the possession of the assessee, the interest paid thereon has to be allowed as deduction. 11. The next item is repayment of old unsecured loans amounting to ₹ 60 lac. The assessee repaid these loans taken earlier for business purpose on which he was paying interest @ 11.33%, as against fresh loans taken on interest @ 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #8377; 3,98,689/- made by the AO from foreign travel expenses. The assessee claimed foreign travel expenses amounting to ₹ 15.94 lac. The AO made an ad hoc 25% disallowance from foreign travel expenses by observing that no proof of purpose of foreign travel was filed. The ld. CIT(A) ordered for the deletion of addition. 16. After considering the rival submissions and perusing the relevant material on record, it is observed from the impugned order that the assessee filed all relevant details with the AO about the foreign visits undertaken by him, meeting the suppliers of fruits and attending various conferences related to fruits in various countries. The assessee also furnished names of parties or companies with whom he interacted during his foreign visits. These findings recorded by the ld. CIT(A) have not been controverted by the ld. DR. Under such circumstances, we are of the considered opinion that there can be no basis for making any ad hoc disallowance towards foreign travel expenses. We, therefore, approve the view taken by the ld. CIT(A) on this score. This ground fails. 17. In the result, the appeal is partly allowed for statistical purposes. The order pronou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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