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TMI Blog2018 (7) TMI 359X X X X Extracts X X X X X X X X Extracts X X X X ..... its customers do not constitute “work” within the meaning of section 194C of the Act, therefore, we do not find any reason to interfere with the finding of the CIT(A). Our view is fortified by the judgment of the Hon'ble High Court of Bombay in the case of The East India Hotels Ltd & Anr. Vs. CBDT [2009 (3) TMI 8 - BOMBAY HIGH COURT] Addition on account of capital gains - Held that:- As in case the capital gains in the hands of the assessee is enhanced, then the consequential capital gains in the hands of the co-owner has to be reduced and since both of them are taxed at the highest rate of tax, the exercise would be tax neutral. The CIT(A), correctly directed the AO to delete the addition Addition on account of personal expenses - Held that:- Since the AO has made adhoc disallowance and since the first appellate authority, in his wisdom, has directed the AO to restrict the disallowance to 50% of the total disallowance, we do not find any reason to interfere with the findings of the CIT(A) - Revenue appeal dismissed. - ITA No. 5502/DEL/2014 - - - Dated:- 3-7-2018 - SHRI H.S. SIDHU, JUDICIAL MEMBER, AND SHRI N.K. BILLAIYA ACCOUNTANT MEMBER For The Assessee : Dr. Rakes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the matter before the CIT(A) and reiterated its contentions. After considering the contentions of the assessee, the CIT(A) observed as under: 5.1 I have carefully considered the fades of the case, submission of the appellant and perused material on the record. The maintenance of regular books of accounts which are duly audited is not questionable. The entire basis for rejection of books of account is the Auditor's comment in column 11(a) of the Tax Audit Report in Form 3CD of the Income Tax Rules. I have perused the Tax Audit Report in Form 3CD and find merit in the appellant's submission that the AO has not only appreciated the entire comments in column 11(a) but also relevant and overlapping comments in columns 11(b), 11(c) and 11(d) of the Tax Audit Report in Form 3CD. The Auditor's comment in column 11(a) of the Tax Audit Report in Form 3CD reads as under: Generally cash system of accountancy had been adopted for commission receipts. However sub-commission and other expenses have been accounted for on mercantile basis. It had been explained during the course of audit that normally commission receipts are realized on its accrual on happening of transact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ditor are in contradiction to the submissions made by the assessee. It is equally true that if the earlier years expenses are allowed during the year under consideration and if the earlier years receipts are excluded from the income of the year under consideration, the whole exercise would be revenue neutral. There is no dispute that the receipts shown by the assessee are matching with Form No. 26AS filed by the deductor of TDS. In our considered opinion, income statement of the assessee does not give any distorted figure. In any case, the expenditure incurred by the assessee for earning income has to be allowed. In any case, legitimate expenses incurred by the assessee in earning income has to be allowed and once the income has been accepted as such, and taxed accordingly, the matching expenditure has to be allowed. We, therefore, do not find any reason to interfere with the findings of the CIT(A). Ground No. 1 is dismissed. 11. Facts relating to the grievance raised by the assessee vide Ground No. 2 show that the AO found that the assessee has claimed ₹ 9,96,493/- on account of business promotion expenses and on perusal of the details, the AO noticed that the assessee ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee reiterated what has been stated during the assessment proceedings and contended that the exercise would be Revenue neutral. 19. After considering the facts and submissions, the CIT(A) observed that in case the capital gains in the hands of the assessee is enhanced, then the consequential capital gains in the hands of the co-owner has to be reduced and since both of them are taxed at the highest rate of tax, the exercise would be tax neutral. The CIT(A), accordingly, directed the AO to delete the addition of ₹ 12,84,820/. 14. The ld. DR could not add anything new to what has been done by the AO. 15. Per contra, the ld. AR relied upon the findings of the CIT(A). 16. We have given thoughtful consideration to the orders of the authorities below qua the issue. If the contention of the AO is accepted, then the working of capital gain tax would be as under: Particulars Pran Nath Sunil Chopra Total Total Cost of Purchase 48,51,000/- 65,01,750/- 1,13,52,750/- {Cost of Construction 27, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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