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TMI Blog2016 (1) TMI 360X X X X Extracts X X X X X X X X Extracts X X X X ..... ion on account of labour charges - non deduction of tds - Held that:- TDS provisions are applicable to the assessee for Asst Year 2006-07 and hence section 40(a)(ia) of the Act has been rightly invoked on the assessee for Asst Year 2006-07. However, we find that the second proviso to section 40(a)(ia) of the Act which is introduced in the statute with effect from 1.4.2013 has been held to be retrospective in operation by the recent decision of Hon’ble Delhi High Court in the case of CIT vs Ansal Land Mark Township P Ltd reported (2015 (9) TMI 79 - DELHI HIGH COURT). Accordingly, we deem it fit and appropriate , in the interest of justice and fair play, to set aside this issue to the file of the Learned AO to examine the issue in the light of the decision rendered by the Hon’ble Delhi High Court as stated supra and decide the issue in accordance with law. The assessee is also directed to provide necessary evidences and documents to prove that the payee had duly disclosed the subject mentioned receipt of labour charges in their respective returns and paid the due taxes thereon. - Decided in favour of revenue for statistical purposes. Addition being the difference between the depos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the order of the Learned CIT(A), XII, Kolkata in Appeal No. 444/XII/41(2)/08-09 dated 21-10-2011 for the Asst Year 2006-07 passed against the order of assessment framed by the Learned AO u/s. 143(3) of the Income Tax Act, 1961 (hereinafter referred to as the Act ). 2. Md.GhyasUddin,JCIT,learnedSr.DR argued on behalf of the revenue and Shri Manoj Kr. Tiwari, FCA, learned AR argued on behalf of the assessee. 3. The first and second issue to be decided in this appeal is that whether an addition of ₹ 1,76,113/- and an addition of ₹ 24,240/- could be made on an estimated basis in the facts and circumstances of the case. 3.1. The brief facts of this issue is that the assessee is a promoter and developer of real estate and runs the business under the name and style of M/s Uttam Kumar Kundu . The assessee constructed a residential apartment at 13A/27, Ariff Road, Kolkata 700 067 on a plot of land measuring 400.687 square meter. The Learned AO observed that as per sanctioned plan that total floor area of 861.34 square meter which includes service area of 215.538 square meter and car parking of 60 square meter was sanctioned to be constructed in Ground plus 4 floors ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... account of estimated profits. 3.4. The Learned AR reiterated the facts stated by him before the lower authorities. The Learned AR argued that the books of accounts submitted by the assessee have not been rejected by the Learned AO and hence there is no need to estimate any profits thereon. He also stated that necessary mutation has been made in favour of widow of his younger brother in the municipal records for Flat No. 3B and Flat No. 3C. He also filed evidence that electricity connection and bill is only in the name of his younger brother in respect of these two flats. He also stated that the factum of gifts given by the assessee and the car parking space used by the assessee for his business purposes have been duly accepted by the Learned AO in the reopened proceedings for Asst Year 2005-06 and placed the copy of the assessment order on record. He also fairly stated that the said order copy was also placed before the Learned CITA by the assessee. In response to this, the Learned DR vehemently supported the order of the Learned AO. 3.5. We have heard the rival submissions and perused the materials available on record. We find that the assessee is engaged in building prom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... two flats as closing stock of work in progress. But the Learned AR had stated in his written submissions before the Learned CITA which are reproduced in Learned CITA order at page 2 para 3, that the Learned AO had accepted the factum of gift of two flats to the widow of younger brother of the assessee as genuine in Asst Year 2005-06. A copy of the assessment order for Asst Year 2005-06 is already on record. The finding given by the Learned AO in this regard in the reopened Asst Year 2005-06 is reproduced hereunder:- Page 3 of the written submissions: In the Assessment Order passed on 09.12.2010, for the Financial Year: 2004-05 relevant to the Assessment Year: 2005-2006, the Ld. Assessing Officer on page-2 has concluded as under:- On 07.12.2010, it was among other things, explained that the garage is used for the business of the assessee so he didn t take into account while showing WIP. Extracts of KMC records have been furnished showing the business address at 13A/27 Ariff Road, where the flat came up. Besides, the AR produced papers showing Municipal office records show mutation in favour of Smt. Mithu Kundu who is wife of the late brother. .. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d sought to construct one more flat which was also found and confirmed by the Inspector of Income Tax on physical verification. The Learned AO found that a sum of ₹ 11,00,000/- was shown as advance received for flat in the balance sheet of the assessee as on 31.3.2006. When confronted by the Learned AO, no evidence showing the date of completion of construction of the said flat was produced by the assessee. The Learned AO found from the deed of agreement that Sri Kripa Sindhu Panja had booked the said flat measuring 824 sq.ft. for ₹ 11,00,000/- and the said flat was completed in all respects and possession handed over to Sri Kripa Sindhu Panja. However, the registration of the said flat was not executed in favour of Sri Kripa Sindhu Panja by the assessee during Asst Year 2006-07. The Learned AO also found that the cost of construction of the said flat was not reflected as closing stock of work in progress by the assessee in the balance sheet as on 31.3.2006. The Learned AO further found that the labour charges and cost of materials for the said flat were paid during the financial year 2005-06 which indicated that the said flat was constructed during Financial Year 2005- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld water as the entire work has been completed on the said flat and possession handed over to Sri Kripa Sindhu Panja and on the basis of agreement deed , entire sale consideration of Rs .11,00,000/- has been received by the assessee in Asst year 2006-07. We hold that the registration of the property is not essential as possession is already handed over to the buyer and consideration fully received from buyer in Asst Year 2006-07 and hence transfer of flat is fully complete in Asst Year 2006-07 itself. We hold execution of sale deed and registering the same is only procedural in nature. Reliance in this regard is placed on the decision of the Hon ble Rajasthan High Court (Jaipur Bench) in the case of CIT vs Vishnu Trading Investment Co. reported in (2003) 259 ITR 724 (Raj) which in turn relied on the decision of the Hon ble Apex Court in the case of CIT vs Poddar Cement Pvt Ltd and Others reported in 226 ITR 625 (SC) wherein it was held that :- Pages 725,726 of 259 ITR 724(Raj.) The Tribunal has decided the issue only an the basis of nonregistration of the transfer deed. The Tribunal has taken the view that in the absence of the registration of the sale deed, there is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Learned AO found that the assessee s gross receips in the previous year 2004-05 relevant to Asst Year 2005-06 had exceeded ₹ 40 lacs and hence is liable for tax audit and accordingly the provisions of Chapter XVII B of the Act containing TDS compliance provisions are applicable to him in Asst Year 2006-07. This conclusion was reached by the Learned AO based on the sale of flats completed by him in Asst Year 2005-06 for which independent remedial action was sought to be taken by the Learned AO. Since the aforesaid payments were made without deduction of tax at source , disallowance u/s 40(a)(ia) of the Act was made by the Learned AO. On first appeal, the Learned CITA concluded that Asst Year 2006-07 is the first year of tax audit for the assessee on the basis of his books of accounts and hence there is no obligation for him to deduct tax at source in Asst Year 2006-07 and accordingly deleted the addition made u/s 40(a)(ia) of the Act. Aggrieved, the revenue is in appeal before us on the following ground:- 4. Ld. CIT(A) has erred in law as well as on fact in deleting the addition of ₹ 3,21,845/- on account of labour charges. 5.2. The Learned AR relied on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held that said proviso is declaratory and curative in nature and has retrospective effect from 1st April, 2005 . Accordingly, we deem it fit and appropriate , in the interest of justice and fair play, to set aside this issue to the file of the Learned AO to examine the issue in the light of the decision rendered by the Hon ble Delhi High Court as stated supra and decide the issue in accordance with law. The assessee is also directed to provide necessary evidences and documents to prove that the payee had duly disclosed the subject mentioned receipt of labour charges in their respective returns and paid the due taxes thereon. If the same is proved, the assessee should be given relief. Accordingly, the ground no. 4 raised by the revenue is allowed for statistical purposes. 6. The next issue to be decided in this appeal is as to whether an addition in the sum of ₹ 3,21,845/- being the difference between the deposits and withdrawals could be added in the facts and circumstances of the case. 6.1. The brief facts of this issue is that the Learned AO found on perusal of bank accounts of the assessee bearing account numbers 2801 and 1183 and there were no receipts in cash ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this regard. Hence the ground no. 5 raised by the revenue is dismissed. 7. The next issue to be decided in this appeal is as to whether an addition of ₹ 1,37,692/- towards interest on bank loan could be made in the facts and circumstances of the case. 7.1. The brief facts of this issue is that the assessee claimed a sum of ₹ 1,37,692/- towards interest on bank loan as business expenditure . According to the Learned AO, the loans borrowed by the assessee were utilized for advancing interest free loans to different persons such as M/s Akash Associates, Amal Chakraborty, Kundu Associates, Kundu Refinary Work etc to the tune of ₹ 30,82,430/-. Hence he concluded that the borrowed funds were diverted for non business purposes and disallowed the interest of ₹ 1,37,692/- . On first appeal, the Learned CITA found that the assessee has made advances to M/s Kundu Refinery Works (partnership firm of assessee) and Kundu Associates (partnership firm of assessee) and found that assessee is having his own capital of ₹ 28,69,669/- and bank loan of ₹ 16,40,000/-. The advances given including the trade advances are to the extent of ₹ 35,52,606/- which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mal Chakraborty and M/s Akash Associates were for the purpose of business. We make it very clear that if the advances made to these two parties are less than the own funds available with the assessee, then no disallowance of interest should be made. Accordingly, the ground no. 6 raised by the revenue is allowed for statistical purposes. 8. The next issue to be decided in this appeal is as to whether an addition of ₹ 37,173/- could be made on account of various expenditures in the facts and circumstances of the case. 8.1. The brief facts of this issue is that the assessee claimed the following expenses as deduction in his return:- General charges 5,318 Personal expenses 8,000 Bank charges 456 Service charges 400 Telephone bills 2,422 General insurance 28,577 45,173 According to Learned AO the aforesaid expenses were debited to profit and loss account which could not be substantiated with a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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