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TMI Blog2018 (6) TMI 1180X X X X Extracts X X X X X X X X Extracts X X X X ..... her enquired under section 133 (6) with the bankers who also confirmed the payment of the above sum. The bank has also confirmed that the loan has been paid to the assessee as term loan. In view of this we do not find any infirmity in the order of the Ld. CIT – A in deleting the disallowance. Disallowance under section 14A - non recording of satisfaction - Held that:- AO did not recorded any satisfaction with respect to the correctness of the claim of the assessee after examining the books of accounts but straightway proceeded to disallow 2% of the other expenditure without any basis - In absence of any satisfaction recorded by the AO, we do not find any infirmity in the order of the Ld. CIT – A in deleting the disallowance - Revenue appeal dismissed. - ITA No. 2465/Del/2016 - - - Dated:- 20-6-2018 - SHRI H.S.SIDHU, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER For The Revenue : Shri Sanjit Singh, CIT DR For The Assessee : Shri Ajay Wadhwa Advocate ORDER PER PRASHANT MAHARISHI, A. M. 1. This is an appeal filed by the revenue against the order of the ld CIT (A)- 23, New Delhi dated 04.02.2016 for the Assessment Year 2007-08 pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the sale of scrap mentioned in the evidence found during the course of search of Mr. Bipin Shah. On appeal before ITAT, it was set aside to the file of the Ld. AO with direction contained in page No. 110 of the order. According to that coordinate bench directed the AO to grant opportunity to cross-examine of Shri Bipin Shah. Thereby the coordinate bench set aside the issue of the addition of ₹ 1 024 7738/ back to the file of the Ld. AO. Before the coordinate bench, the assessee raised an alternative pleading that sale of scrap if any will go to reduce the block of assets and shall not be eligible to tax under section 69C of the act. The coordinate bench also directed the AO to consider the argument of the assessee after affording reasonable opportunity of hearing. 3. Consequently, the Ld. assessing officer passed an assessment order on 30/3/2014 wherein in the addition of ₹ 1, 02, 47, 738/- on account of unaccounted sale of scrap was made. He further made disallowance of loan processing fee of fees ₹ 1, 12, 00, 000/ . The last disallowance was under section 14 A of the income tax act of ₹ 10,55,863/-. The Ld. assessing officer noted that the assessee h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assets as well as the sale of the scrap. Further, with respect to the disallowance of the loan-processing fee he submitted that loan-processing fee could not be allowed as business expenditure unless the assessee proves that the loan was used for the purposes of the business. With respect to the disallowance under section 14 A of the income tax act he submitted that the Ld. AO has recorded proper satisfaction before making any disallowance. He further stated that the assessee has not disallowed any sum in the original return of income. He therefore submitted that the disallowance made by the Ld. assessing officer is correct and the Ld. CIT A has committed an error in deleting the above disallowance. 6. The Ld. authorized representative vehemently supported the order of the Ld. CIT A and submitted that the direction of the coordinate bench has not been considered by the AO. He further referred that when the Ld. AO himself has noted that there was a huge repair going on in a hotel the scrap was related to that only and the claim of the assessee was to adjust the above sale of scrap against the written down value of the block of the asset. He submitted that Revenue could n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is also related to the same activity and therefore it should be considered as income of the assessee separately. In fact, the scrap was sold by the assessee to M/s IB enterprises and not to on organized sector. There is no evidence available with the revenue that the scrap sold by the assessee which is credited to the miscellaneous income account in the profit and loss and this scrap are related to the same transaction or similar transaction. The Ld. AO did not even examine the person who bought the scrap. The Ld. CIT A has held that the above sale of scrap is related to the building, which is accepted by the Ld. assessing officer therefore, there is no reason in absence of any other evidence not to grant the same as credit against the returned down value of the assets. Even otherwise, the assessee has been granted less depreciation with respect to the above addition. The Ld. departmental representative could not controvert the fact that during the year the major repairs and renovation work was going on in the hotel of which the scrap is stated to be by the assessee. In view of this we do not find any infirmity in the order of the Ld. CIT A in considering that the scrap sale of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd No. 3 of the appeal of the revenue is dismissed. 13. Ground No. 4 is with respect to the disallowance under section 14 A of the income tax act. In the original assessment order the AO disallowed 5% of other expenditure on estimate basis after observing that no disallowance towards interest is called for since he did not claim any interest on borrowed capital utilized for such investment as against ₹ 7, 74, 813/ worked out is disallowable by the appellant. In the revised return assessee restricted it to ₹ 3, 95, 682/ . The Ld. assessing officer estimated 2% of other expenditure and made a disallowance of ₹ 1 0, 55, 863/ . The Ld. CIT appeal deleted the above addition as Ld. AO failed to record any satisfaction with respect to the claim of the assessee for on the disallowance made by assessee Suo Moto. 14. The Ld. departmental representative relied upon the order of the Ld. assessing officer and the Ld. authorized representative submitted that in absence of any satisfaction recorded by the Ld. C AO the disallowance under section 14 A of the income tax act cannot be made. 15. We have carefully considered the rival contention and the orders of the lower a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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