9911796707
TMI Blog2016 (10) TMI 927X X X X Extracts X X X X X X X X Extracts X X X X ..... chase of impugned property and same money was returned. In this point, Ld. DR has not brought anything on record to the finding of Ld. CIT(A). We also find that AO before making such addition on the basis of ITS information from the office of Sub Registrar should have issued a notice u/s. 133(6) of the Act. The AO has not exercised his power u/s. 133(6) of the Act. In this view of the matter, we find no reason to interfere with the findings arrived by the Ld. CIT(A). Addition u/s 36 - Held that:- We find that assessee in the instant case, has incurred interest expenditure on the money borrowed for an amount of ₹ 2,47,91,689/- and assessee claimed the interest expenditure as revenue expenditure. However, the AO disallowed the same by holding that assessee has no experience of property business, therefore, it should have been treated as investment in assessee’s business. Therefore, the interest expenditure incurred on the borrowed fund utilized for the purpose of investment cannot be allowed as deduction. However, Ld. CIT(A) deleted the addition made by AO by observing that assessee has treated the same as stock-in-trade in its books of account. Now the issue before us arise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rty deal confirmed by the Sub Registrar Office and the ITS details. 4. As per the information gathered by Income Tax Department through ITS on 06.09.2011, the assessee jointly with M/s Neptune Infrastructure (MNI for short) purchased a property on 26.09.2008 for a consideration of ₹ 111,43,65,000/- which was registered at Vadodara Sub-Registrar office. From the same details of ITS, it was found that assessee has sold the property on 21.10.2008 for a sum of ₹ 68,03,07,175/- which was also registered in Vadodara, Sub-Registrar office. The Assessing Officer, during the course of assessment proceedings found that details for the sale of property has not been shown in its books of account. On question by AO about the non disclosure of sale of property in the books of account, the assessee at the fag-end of the assessment submitted that no such property has been sold. However, AO disregarded the claim of assessee by observing that the sale transaction has not been shown in the books of account, accordingly, AO treated the sale transaction of Rs. 68 crores as undisclosed cash credit in the hands of assessee and added to the total income of assessee u/s. 68 of the Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was paid by it and balance of ₹ 30.08 crores was by MNI. From the above, AO submitted that there was a complete denial from the side of assessee for having transactions for sale of impugned property. Now from the above, MoU it is clear that the transaction between assessee and its associates has taken place and therefore the claim of assessee that it did not enter into any transaction is not tenable. The assessee in compliance to remand report submitted that it has not entered into any transactions of sale of impugned property. The assessee along with MNI has advanced the money to MASEL for the purchase of impugned property and for the same, a MoU was made but that MoU does not amount to sale of the impugned property. All the necessary transactions for the payment made to MASEL have been duly disclosed in its respective books of account. Actually the sale was made by MASEL to the party based in Pune. Ld. CIT(A), accordingly, deleted the addition made by AO by observing as under:- 10. I have carefully considered the observations of the Assessing Officer and submissions of the appellant. The Assessing Officer received information through ITS on 06.09.2011. In the ITS deta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have been duly verified. The appellant has duly accounted for the money received as confirming parties in the books of accounts and there is no dispute on the same. Therefore, information in the ITS was wrong and incorrect by disclosing the sale of such property by the appellant and M/s. Neptune Infrastructure. It is held that the appellant is only a confirmatory party to the sale of said property and not a seller. The amount of ₹ 39.03 crores received as confirmatory party being the old advance given for purchase of said property has been duly accounted for in the books of accounts. Therefore, the addition of ₹ 68,03,07,175/- made by the Assessing Officer is deleted. This ground of appeal is allowed. Being aggrieved by this order of Ld. CIT(A) Revenue is in appeal before us. 6. Before us Ld. DR submitted that as per ITS details, the name of assessee is reflecting as seller of the impugned property and therefore there is no doubt that assessee has made sale of impugned property. However, from the deed of sale of the impugned property, the name of assessee along with MNI is appearing as confirming party. Now the question arise that why the assessee will be a co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpugned property on the basis of ITS received from Sub Registrar Office of Vadodhara. However, Ld. CIT(A) deleted the addition made by AO by observing that assessee in the instant case was a confirming party and it has not made any sale. The assessee initially advanced the money to MAESL which was returned back to assessee and MNI. Now the question before us arise so as to whether assessee has made any sale of the impugned property without recording the impugned sale in its books of account. From the facts, we find that provision of Sec. 68 of the Act are attracted only in a case where any credit entry found in the books of account of assessee which is not explained by assessee. In the instant case, no such entry was detected by AO. In our considered view, the provisions of Sec. 68 are not applicable in the present case. Similarly, from the details submitted by assessee, we find that assessee has given advanced money for the purchase of impugned property and same money was returned. In this point, Ld. DR has not brought anything on record to the finding of Ld. CIT(A). We also find that AO before making such addition on the basis of ITS information from the office of Sub Registrar s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erty was purchased with a sole intention of carrying the business of real estate and same was shown as closing stock in its books of account. The assessee further submitted that it has earned business income of ₹ 40,500/- by way of storage charges and same was shown in its books of account under the head business and profession . Accordingly, Ld. CIT(A) deleted the addition made by AO by observing as under:- 15. I have carefully considered the observations of the Assessing Officer in the assessment order and submissions of the appellant. The appellant has bought the property jointly with M/s Neptune infrastructure for a consideration of ₹ 111,43,65,000/- and the appellant s share was ₹ 39,33,71,283/-. This piece of land is situated in a prominent area at Vadodara as per the appellant and it has considerable commercial value. The appellant further submitted that it was with the sole intention of venturing into the real estate business that it has entered into the transaction of purchase of such huge plot of land and funded the same principally out of borrowed money. This purchase appears in the books of appellant at the end of the year as Closing Stock. The a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lied on the order of AO and he left the issue to the discretion of the Bench. On the other hand, Ld. AR before us submitted that the impugned property was purchased with the sole intention to venture the real estate business. Ld. AR further submitted that the activity of the property business is duly covered in the main object of the assessee and in support of assessee s claim has submitted the copy of its Memorandum Articles of Association and drew our attention to its clause (iv) which reads as under:- 4. To carry on the business as dealers, owners and investors in land, building, factories for which purpose to acquire and purchase, take on lease, tenancy or n exchange, hire or by other means obtain ownership and/or options over any freehold or other property for the said estate or interest thereof any rights, privileges or easements over or in respect of any property, land or any building and to turn into account, develop the same and dispose of or maintain the same and to build townships markets or other buildings or conveniences and to equip the same or any part thereof with all or any amenities or conveniences, drainage facility, electric, air-conditioning, telegraphic ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
