9911796707
TMI Blog2015 (12) TMI 397X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. 2008 two floors of the school building were complete. It is also found that in the case of BKF the AO has mentioned that the trust was conducting schools at Mira Road and Chembur, that there is no doubt that BKF was deducting tax at source on payment of rent to the Assessee. The AO has mentioned that instead of occupying the building the assessee might have utilised some other premises for running the school. We do not find any reason for arriving at the said inference. The evidences produced before the FAA about admission of students and their report cards for 3 academic years clearly prove that the school had commenced its activities in the year under consideration. We do not find any legal infirmity with the order of the FAA who had held that income could not be taxed as income from other sources and that interest paid had to be allowed u/s. 24 of the Act. - Decided against revenue. Allowance of expenses on account of improvement of leased premises - Held that:- We find that the assessee had installed various items as per the mutual agreement entered into with the lessee, that the amount was capitalised. We have, in the earlier part of the order, held that rental income wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led its return of income on 9. 9. 10 declaring total income at Rs. Nil. The AO completed the assessment u/. s 143 of the Act on 30. 3. 2011 determining the income of the assessee at ₹ 4. 24 crores. 2. First two Grounds of appeal deal with taxing the rental income under the head income from house property as against income from other sources as well as allowance of interest expendi-ture of ₹ 3. 26 crores. During the assessment proceedings, the AO found that vide agreement, dated 11. 8. 2006, the assessee had acquired development rights in respect of a plot of land situated at Govandi, Chembur, that an irrevocable general power of attorney was also executed in respect of the said land, that the plot of land was reserved for construction of school and play ground, that approval in respect of the said property was received on 10. 1. 2007 in the name of the original owner, that the assessee negotiated with Babubhai Kanakia Foundation(BKF)for giving school building on rental basis, that the Government (Govt. ) of Maharashtra issued an NOC for starting IB school at Chembur, hat it requested for amendment in the approved plan and the same was approved on 8. 3. 2007, that it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ructed building area mentioned in the agreement was much more than the actual proposed plan, that IOD was issued in the name of the original land holder, that IOD dt. 22. 11. 2007 was not the permission for development unless it was clubbed with the CC, that certificates issued by the architect of the building were fabricated and were an afterthought to accommodate the assessee's plan to show that the building completed before July 2008, that it had not produced any evidence about admission of students for conducting of classes, copies of admission forms, that instead of occupying the building the assessee might have utilized some other premises for school activities, that no certificate was taken from appropriate authority to operate the school, that no major expenses were capitalized with the building, that labour charges were incurred before 31. 7. 2008, that same were found to be spread over throughout the year. Finally, he held that the income arising to the assessee was to be taxed under the head income from other sources. He also held that the interest amounting to ₹ 3. 26 crores was not allowed. 2. 1. Aggrieved by the assessment order the assessee filed an appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding was not completed during the year under consideration and for making disallowance of interest of ₹ 3. 26 crores. We find that in this case IOD was issued in relation to the plan that was put up on 25. 8. 2006 i. e. after entering into the development agreement. The fact is confirmed from the IOD dated 10. 1. 2007 and CC dt. 24. 4. 2007. It is found that amended plan was put up on 21. 2. 2007 and was approved on 8. 3. 2007, that construction work started in earlier assessment year and expenses were shown in the books of account from that year, that total expenditure incurred till 31. 3. 2007 was of ₹ 10, 53, 44, 733/-, that further expenses were incurred in the subsequent year and showed in the books of account, that the assessee had given details of the constructed area and the availability of certain areas free of FSI, that the certificate of the architect indicates that 3rd to7th floors were constructed later on, that the statement of the architect were not provided to the assessee though the same were relied upon by the AO, that as on 12. 4. 2008 two floors of the school building were complete. It is also found that in the case of BKF the AO has mentioned that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ally agreed that the assessee would provide all the items, that the ownership of those item would remain with the assessee. After considering the submission of the assessee and the assessment order, the FAA held that the disallowance of capitalisation of school building was not appropriate, that the items were installed as per the mutual agreement between the parties, that the AO was not justified in disallowing the interest related with the expenditure. He also held that expenditure was not reduced from the taxable income, that the rental income was to be assessed under the head income from house property, that the capitalisation would not make any difference. Finally, he allowed the appeal filed by the assessee. 3. 2. Before us, the DR supported the order of the AO and the AR supported the order of the FAA. We have heard the rival submissions and perused the material before us. We find that the assessee had installed various items as per the mutual agreement entered into with the lessee, that the amount was capitalised. We have, in the earlier part of the order, held that rental income was to be assessed u/s. 22 of the Act. Therefore, we agree with the observation of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods worth ₹ 6. 38 crores were admitted to be bogus both by the purchaser and the seller, that the rest of the purchases were found to be genuine, that the search party had also not pointed about anything wrong with the purchases made with the assessee, that without some concete evidence the AO was not justified in disallowing the purchase. 4. 2. Before us, the DR and the AR supported the order of AO and the FAA respectively. We find that the AO had made the disallowance on the basis of statements of Girish Sangani and Rajesh Kanakia, that both of them had admitted of accommodation entries and had made admission u/s. 132(4) of the Act with regard to these sale/purchases, that both of them had not alleged that the assessee had taken accommodation entries, that documentary evidences were produced regarding purchase of goods and same were not rebutted by the AO. In our opinion, the addition had to be restricted to the four entities who had taken the accommodation entries. As the AO has not brought on record that purchases made by the assessee were part of bogus bill transactions, so we are of the opinion that FAA was justified in deleting the addition with regard to addi ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
